Expert urges NSCC students to be wary of credit cards

LYNN – When it comes to credit cards, college students are more often victims of fine print, excessive fees and ethically questionable billing practices than senior citizens.”When we first started looking into this, we assumed senior citizens would be at the top of the list, but as it turns out, we were wrong,” said U.S. Rep. John F. Tierney, a Salem Democrat and key proponent in Congress for education and workforce opportunities.Tierney met with North Shore Community College students Thursday, accompanied by other government experts, to warn them about unscrupulous credit card companies and how easy it is to get into debt.According to Tierney, statistics show that college students between the ages of 18 and 30 are the hardest hit segment of the population in terms of credit card expenses, most often accrued through late fees, exorbitant interest rates and other penalties.”Fifty-five percent of college students get a credit card their first year in school. By the second year, 95 percent have them. And by the time they graduate, most students have four credit cards with an average debt of $2,865,” Tierney said.At graduation, these students leave college with a diploma in one hand and massive debt in the other, given that most owe four-to-six digit school loans plus the outstanding credit card balances.Tuned into this growing trend, Tierney decided to take a closer look at the credit card industry where predatory practices are as numerous as those found in the sub-prime real estate market. He quickly learned that 25 percent of freshman college students lack the skills necessary to handle their own finances. He also found that some credit card companies increase the interest rate if the cardholder is late paying a home utility bill, which is an expense completely unrelated to the credit card or credit contract.The so-called Universal Default Rate clause contained in many credit card contracts is also a red flag, he said, explaining that if a person with five credit cards is late making a payment on one, the interest on all the cards automatically is increased to the highest rate.”We’re trying to get legislation in place to address these kinds of bad practices,” he said, adding that not all credit card companies are predatory. “You have to be careful when you agree to sign up for a card. Read the contract.”In one instance, a credit card company was offering a free iPod or backpack to anyone who signed up. Without thinking or reading the fine print, many people took advantage of the come-on, only to learn later they were responsible for excessively high interest rates and harsh fees.Nur-ul-Haq, an attorney for the U.S. Federal Trade Commission (FTC), accompanied Tierney to the Lynn campus and to other locations this week, including the Torigian Community Life Center in Peabody and Salem State College. It was his task to provide details on how to avoid credit card debt and identity theft.”Credit means you buy something with the promise of paying later. It’s also a measure of your trustworthiness to pay for it later,” he said, stressing that it’s important to establish a credit record by buying goods or services with a credit card and promptly paying the balance.Without a credit history, it would be difficult to rent an apartment, buy a car or something larger like a home, he said.Debit cards, which withdraw funds from your bank account to pay for the item, also help establish a credit history, as do charge cards, which require the monthly balance be paid in full, Nur-ul-Haq said.The attorney advised students to view their credit history report every 60 days, if only to be certain nobody has tried to use your identity to obtain fraudulent credit. He also stressed the need to protect confidential information such as bank account numbers, Social Security number, mother’s maiden name, credit card numbers, and other personal data.”Don’t leave these papers laying around,” he said. “Ten million U.S. citizens annually have their identity st