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"This year has been a banner year for congressional intervention in terms of credit cards; the industry as a whole has felt heat from the government and the public," said Linda Sherry, director of national priorities for Consumer Action. "Chase gave up two cycle billing as a concession."
Though the terms of Virginia Tech's deal could not be disclosed under contract, similar contracts between credit card companies and universities are commonplace. The deals bring in millions, and in the few cases of public disclosure, the deals are in the millions. Even though the deals are very profitable for universities, there is little room for negotiating.
"The negotiations between us and Chase were mainly involving the amount of money the alumni association would receive and the length of the deal," Tillar said. "Negotiations involving the APR couldn't really be done."
Others disagree with this viewpoint.
"Universities have the power to change some of the provisions with the credit card companies," Sherry said, "Student activism could put some pressure on the universities to change the type of deals they make with credit card companies,"
Sherry used the example of the AARP, the American Association of Retired Persons, and the affinity card they held with Chase.
"AARP was powerful enough to alter some of the provisions they had in their contract with Chase," Sherry said.
With credit cards having high interest rates and fees, there is now more importance on consumer responsibility than ever.
"People need to look at APR, annual fees, and what the fees are when looking for a credit card," Leech said. "Consumers need to make sure the credit card offer is the best option."
This aspect is highlighted by recent work by the National Foundation for Credit Counseling, which reported half of college students have more than $3000 dollars in debt by the time they graduate. Not only can credit card debt affect students' finances, their impacted credit scores could hurt them in other aspects of life.
"Credit scores are being used in many more ways than were originally intended," Sherry said.
A person's credit score may be used when applying for automobile insurance, when renting an apartment, and even in job interviews. Regardless of the type of credit card a student uses, financial responsibility is the key, Sherry said.
"Use credit cards, and don't let them use you," Sherry said.
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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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