Rogers-Lowell Area News

ATTORNEY GENERAL ALERT: Don’t Get Schooled by Credit Card Debt

Many young adults entering college or the workforce feel the pressure of looming bills and turn to credit cards to cover the initial costs but end up paying exorbitant rates long-term. Understanding that credit cards are not free and will only alleviate temporary financial burdens is an important concept for newly independent students. Accumulating credit card debt is avoidable; unfortunately, new users often fall victim to debt that hurts their ability to invest in personal pursuits like obtaining home loans and other financing in later years.

“Credit cards can be helpful but new users may not be fully aware of the costly terms and conditions,” says Arkansas Attorney General Leslie Rutledge. “Forgetting to make a payment or exceeding a card’s limit can be devastating to a consumer’s credit score, having a detrimental impact on long-term plans to buy a house or car.”

As preventative strategies to young adults interested in applying for a credit card, Rutledge offers this advice when using a card:
• Submit payments on time. Making regular payments is the best way to improve a credit score and qualify for less expensive credit.
• Pay the whole balance owed if possible. Although it may seem easier to pay the minimum, doing so costs more in the long run, and it will take much longer to pay off the debt.
• Do not “max out” a credit card. Charging the full credit limit is risky, and it will affect a consumer’s credit score.
• Do not respond to every tempting credit card offer. Using too much credit could lead to having uncontrollable debt.
• Read the fine print as some credit cards include expensive annual fees and higher interest rates in exchange for incentives like airline miles and bonus points. Some credit cards offer other services such as lower annual percentage rates, insurance and other items at no cost.

To protect college students from coercive credit card companies and debt, the Arkansas General Assembly enacted legislation in 1999 that restricts the practice of marketing credit cards on college campuses.

College students are further protected by the Credit Card Accountability Responsibility and Disclosure Act, which restricts the marketing of credit cards on campuses nationwide. The advertisement of credit card within 1,000 feet of a college campus or university event is prohibited. In addition, consumers under the age of 21 are required to include a parent’s signature, further binding the parent or guardian to repay debt incurred by the account. Credit card companies are also forbidden from using gifts as a form of persuasion to bribe younger consumers into applying for a card.

For more information and tips to avoid scams and other consumer-related issues, contact the Arkansas Attorney General’s office at (800) 482-8982 or consumer@arkansasag.gov or visit ArkansasAG.gov or facebook.com/AGLeslieRutledge.