Luke Ford's Guide to the Credit Card Application

Here's breaking news about the credit card application.

From Boston.com, a column by Michelle Singletary:

Ed Mierzwinski is trying to get the word out to college students that the free T-shirt or teddy bear or sub sandwich they accept in exchange for signing up for a credit card could end up costing them a lot of financial heartache.

For years now, lenders have set up tables on college campuses offering free stuff to entice students into signing up for credit. The companies know that if they get these young people early, they are likely to capture a customer for a long time. Many schools have signed lucrative deals with credit card companies in which they provide contact lists of students or allow sidewalk marketing by the credit pushers. It's an insidious relationship that is justified because the schools get needed funds and officials insist that the cards help students build a credit history. What many students end up building is a lot of debt.

"They rely on the fact that students are vulnerable," said Mierzwinski, the consumer program director for US Public Interest Research Group.

But now many college students will be seeing new tables on their campuses, marketing a different message. With a grant from the Ford Foundation, PIRG is heading a coalition staging a national counter-credit card marketing campaign on 40 college campuses nationwide. Instead of a credit card application, students will be handed literature warning them about the fees and terms of certain credit cards. They'll still get free items, including lollipops that say, "Don't be a sucker."

From WarrenReports:

Yesterday, representatives from five of the nation’s biggest credit card companies found themselves forced to explain one of their most confusing, egregious and potentially catastrophe-producing practices. Led by Senator Carl Levin (D-Mich.), the Senate Homeland Security and Governmental Affairs Sub-Committee held hearings as a part of its investigation into how credit card companies use falling credit scores to raise interest rates significantly, without adequate warning or clear notice, even on customers who have consistently pay on time for years. Worst of all, credit card companies retroactively apply this higher interest rate to previously accumulated debt.

Credit card companies typically run automated credit checks on their millions of customers every 30 to 90 days; if a customer’s credit score has dropped, the customer’s rate can be increased significantly, even if the customer has a perfect payment history. There is no limit on how much the rate can shoot up due to a change in a customer’s credit score, even though the score is based on a complex formula that includes a wide number of small and large factors.

Phillip Severson writes:

The raise in credit card interest rates no matter if you're always on time is not surprising. After all they no longer recognize the usual 30 days normally used by business as a current payment. They have quietly reduced the time to 20 days and it starts from the day of billing. So if your mail is delayed, tough luck. You can delete their invitations to debt on your e-mail and don’t check your credit score too often, but that’s a no, no, also. I burned out one shredder destroying checks and cards ready to use with my name that I never asked for. The present housing crisis is an example of lenders so greedy for short- term profits at the expense of good judgement. They competed with each other for the lowest teaser interest rates to cash in on the housing boom. They took advantage of the basic human need to live in your own home. Every ad hyped the advantages of home ownership and moving up to a better home with subtle hints that your equity in the old house would take care of every thing. Then they have the nerve to talk about responsible use of credit to cover their lack of responsible lending.

I recommend these links for more information about credit card applications.

Credit Card Application