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.
"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.