As Sydney Maier settled into her sophomore year at the University of Illinois-Chicago last year, she came across an offer she couldn't refuse: free food.
At a Subway franchise near campus, Discover Card representatives gave students sandwiches in exchange for filling out a credit card application. Maier signed up and ate a 6-inch veggie sub on the company. A month later, her new Discover card showed up in the mail.
Stopping that kind of marketing to students is now the center of a campaign led by U.S. PIRG. According to a Nellie Mae study, 3 out of 4 college students have credit cards and carry an average outstanding balance of $2,200. "They're already hammered by the high cost of education. Cards seem like a solution but can become a trap," says Ed Mierzwinski, U.S. PIRG consumer program director.
The organization is asking colleges to adopt a code of principles, which would exclude such gifts as Subway sandwiches and prevent colleges from sharing student information with card providers. The campaign also educates students on the risks and fees associated with credit cards and hands out lollipops labeled "Don't be a sucker" on campuses.
American Bankers Association spokesman John Hall says many students are independent adults who rely on credit cards for expenses, including schoolbooks and emergencies. Plus, he says, there's nothing wrong with a little swag. "PIRG certainly underestimates the intelligence of college students if they think they'll get a credit card just because of a free sandwich," he says.
Bank of America, which occasionally sets up booths on college campuses and hands out freebies such as T-shirts, says it always does so with the permission of the school and in compliance with any rules. Spokeswoman Betty Riess says that most students sign up for credit cards and other banking services through the bank's branches and that the company provides financial literacy handbooks to students. "Our objective is to create a foundation for a long-term banking relationship and to help them build a good credit history that helps them in the future," she says.
Many schools already restrict credit card marketing to their students. According to the Government Accountability Office, some universities and colleges limit credit-card solicitation on campuses, often because of state law. Some card providers have changed their tactics. Discover, which bought Maier her veggie sub, says it stopped marketing on or near college campuses almost a year ago.
Maier says she uses the card only for groceries and pays off the balance each month, placing her among the roughly 40 percent of consumers who avoid paying interest by doing so. So far, at least, that free sandwich has turned her into a satisfied long-term customer. Says Maier: "I think it's a brilliant way to get students to sign up for credit cards."