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At every football game, the Virginia Tech credit card advertised in stands around the parking lot that offer free t-shirts, blankets, and sweatshirts for those who sign up.
However, among the school spirit and freebies that surround the card, students, alumni, and others who apply for it could get more than they bargain for.
The controversy comes mainly from the Virginia Tech affinity card. Affinity cards are credit cards that are created by credit card companies in association with universities, stores, organizations, and other entities.
Organizations that carry affinity cards receive a percentage of money spent on the card, as well as an annual payment from the credit card provider.
The Virginia Tech affinity card, a partnership between the Virginia Tech Alumni Association and JPMorgan Chase Bank, carries high rates and fees. Though the card has a 0percent fixed Annual Percentage Rate (APR) for the first six months, the rate skyrockets to between 18.24 percent and 23.24 percent. There are high fees for customers who go over their credit limit and for late payments that add to customer woes.
The fact there are so many fees is no surprise to associate professor Irene Leech.
"The fees in banking are the greatest source of revenue," Leech said, "Most people don't anticipate fees when they sign up for credit cards.:
The alumni association stressed the value of the card.
"It's a way for alumni to identify with the university and to support the alumni association," Thomas Tillar, vice president of alumni relations. "The alumni seem very pleased with the card."
For the Virginia Tech affinity card, the focus isn't necessarily on providing the lowest rates, Tillar said.
"We've never marketed the card as the best deal in the land," Tillar said.
The high rates and fees for the most part don't apply to alumni, the main users of the credit card.
"Since most alumni don't revolve charges, they don't have to worry about APR or interest rates," Tillar said.
Despite claims of poor rates and fees, the card has improved substantially in the past year. JPMorgan Chase changed its billing on its affinity cards from double cycle billing to single cycle billing earlier this year, matching the billing policy on its non-affinity cards.
"Without the double cycle billing, the card becomes much more manageable," Leech said.
Before the change, Chase assessed interest rates over the course of two months instead of one.
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As an alumnus, let me give you some advice... do NOT get a credit card. NEVER EVER! Use a debit card!
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Credit cards essentially provide you a 30 day unsecured loan and are an incredible deal for the consumer as long as they treat the card as they would a debit card through spending no more than they can afford to payoff at the end of the month. Consumers who pay their cards in full each month take advantage of great benefits including 1% cash back, 30 day loans, near 0% liability for fraudulent transactions, price matching, amongst many other benefits. What should be learned is reasonable and responsible use of a card. Debit cards on the other hand provide little of the benefits, for example debit cards provide less protection for fraudulent transactions, rarely earn you cash back, rarely provide you price matching, etc.
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