Credit Card Follies

. College Students with credit cards are under fire

Last Thursday, Michele Bedell, a student at Virginia's Radford University, went before the United states Congress to request relief from the loan sharks of the credit card industry.

Testifying before the House Banking Subcommittee on Consumer Credit and Insurance, Bedell explained that she had once been an ordinary, happy-go-lucky college student, before Visa and the Discover Card targeted her for financial ruin.

"I used the card frugally," Bedell asserted, and everything was going along smoothly until--get this--her balance increased!

Apparently, all those little charges Bedell had been making didn't just disappear--they added up! For innocent, young Michele, the walls started closing in.

"The downfall of this experience occurred when my minimum payments increased, because my balance had increased," she said.

Michele didn't know where to turn. "I found myself engrossed in my studies and not wanting to stress over the credit cards," she told the assembled congresspeople. "I missed a few monthly payments, and by the time I had enough money to send the payment, the minimum balance would be doubled or tripled, leaving me to send only what I had. The next month I'd still be behind in my payments, and that was when I started to figure out what interest really meant."

Apparently, Radford doesn't require arithmetic as a pre-requisite. And apparently, genius doesn't run in the Bedell family. Michele's mother, Connie, testified that Michele's twin sister is in a similar predicament--with a credit card debt of several thousand dollars and no way to pay it off.

The subcommittee listened earnestly. Its chair, our own Rep. Joseph P. Kennedy II (D-Cam-bridge), wanted to help.

His proposal? To require parental notification when college Students under the age of 21 sign up for credit cards, to place a limit on the line of credit banks can issue students, and to require a parental co-singer for students who want a credit limit over $1,500. "That way, parents will be able to help manage their children's debt problems before they mushroom out of control," Kennedy said.

It seems Rep. Kennedy thinks the Bedell sisters are representative of most college students. "Without adequately knowing the risks of credit...[students] are racking up huge debts that will plague them for years," he warned.

In other words, college students need to be protected from themselves. It's all right for us to drive, join the army, sign contracts, and vote for rep. Kennedy at age 18. But we can't drink until we're 21, and we shouldn't be able to use credit cards without Mom and Dad's permission.

Like the drinking age, the proposed credit card age is a sully idea--a needless and discriminatory infringement on the rights of college students.

Needless, because, as Paul A. Allen, vice president and general counsel of Visa USA, points out, "There are always horror stories, but in reality, college students perform as well as or better than the credit card holding population at large." Roughly four percent of college-age cardholders default on their debt--about the same percentage as the cardholding population at large.

Moreover, federal law prohibits lenders from refusing to issue loans on the basis of the applicants' age.

As Allen notes, "If you're over 18, you're an adult. This is an adult market and they're treated as such by Visa and by the blanks."

Maybe it's Rep. Kennedy who needs to grow up

Stephen E. Frank's column appears on alternate Thursdays