Credit Card Debt Management

Citibank’s mtvU is getting a ton of attention these days, thanks in large part to a CNN report naming it one of the “best student credit cards.” Why all the love from critics? This card knows its target audience all too well. That intuitiveness is something MTV has long bragged about, and now they’re packing their knowledge of the coveted 18-26 demographic into small, power-packed plastic packages.

The card offers five Thank You points for every dollar spent at restaurants, bookstores, record stores, video rental stores and movie theaters. It also give students one point for each dollar spent elsewhere. It offers five percent back on all Amazon.com purchases and a whopping number of points for staying under limit, paying the bill on time and bringing in good grades each semester.

Although it’s refreshing to see a credit card with such an apparent level of social responsibility, mtvU has also been in the news lately for some shady recruiting tactics involving free food. So it’s apparent that they are preying pretty heavily on the college crowd, but that makes sense in light of the fact that college students are the only ones allowed to have this card. Besides, many people consider credit cards just as integral to college life as microwaveable food nowadays. So for those who subscribe to that belief, mtvU is a pretty unbelievable bet. However, before signing up, consumers may want to consider that getting approved for this card can be a fairly rigorous process.

In fact, some say Citibank has applied new verification rules to all its student services. The guidelines require a photocopy of a student ID and a current enrollment sticker, or a copy of the current semester’s paid tuition bill with the student’s social security number on it, printed out directly from the school web site with the URL listed. Also required: proof that the student has a landline phone with the bill in their name. If the bill is not in their name, then a copy of a bank statement from within the last 90 days will suffice.

For those students willing and able to jump through Citibank’s many hoops, mtvU looks to be a very good card indeed. But don’t overlook the interest rate - 0% in the first six months and thereafter a variable rate of more than 17% on purchases and balance transfers, and 22% on cash advances.

From a no-frills, low-interest perspective, students may be better off to use the other two credit cards mentioned in the CNN Money article. That is the Ohio Savings Bank Student Platinum Plus Visa or MasterCard at 13.99% APR, or the Sovereign Bank Student Visa or MasterCard at only 9.9% fixed. The catch on that last one is that the 9.9% Platinum Plus account with Sovereign Bank is granted only to those deemed to have “credit worthiness,” according to Sovereign Bank’s terms and conditions.

Those without “credit worthiness,” like entry-level college students who often don’t have any credit built up yet, will be bumped up to a higher interest credit card with Sovereign Bank. At any rate, responsible use of a low-interest, low limit credit card is the name of the game for college students, and responsible use does not mean swiping the card at every video store or restaurant you can find.

The Consumerist had an interesting post recently. It seems the recent fight against credit card companies recruiting students on campus has legislators up in arms and lenders getting creative.

The Iowa City Press-Citizen reports that state legislators are aiming to curb Bank of America’s credit card recruiting efforts on state college campuses. Ohio Attorney General Mark Dunn recently sued credit marketers with Citibank ties for advertising “Free Burritos” available to hungry Ohio State students. The advertisement failed to mention that students would be required to complete a credit card application.

Syracuse University has a ban already in place against on-campus credit card marketers. Marketers are also prohibited from giving gifts in exchange for credit applications under university guidelines. Citi decided to go just off campus to the Pita Pit and hand out free food in exchange for the completion of forms that allow mtvU credit card applications to be mailed to the consumer. Sneaky, sneaky. Of course, the event was heavily marketed with on-campus flyers, but the actual dirty deeds were done off campus.

Really, something must be done, and sooner rather than later. Legislators seem to be slowly trodding their way toward that goal.