An interesting article in the most recent Business Week examines the increasingly-circumspect relationship between colleges (and alumni associations) and banks or credit card companies.
Not only do financial institutions use free food and gifts to lure 18-year-old students into signing up for a credit card, the banks and credit card companies are using gifts (high-dollar contracts) to form partnerships with colleges. Here is a chart showing some contracts colleges signed to sell out their students to credit card issuers.
States are now starting to look into this practice, including an investigation by New York Attorney General Andrew Cuomo. According to an aide for Mr. Cuomo:
It seems that the schools are simply selecting the university credit card based on who pays the school the most, and that may not be best for students, especially in these hard economic times.As an undergrad, I singed up for a credit card and received a free t-shirt. However, that card still sits in my wallet and is my usual means of payment (paid off monthly, of course). At the time, it offered 5 percent back on all gas and grocery purchases, and 1 percent on everything else. It recently dropped to 1 percent on all purchases, which is good enough for me.
I admit that when I signed up for the card, I was probably more concerned with the free shirt than the terms of the credit card. That is what usually happens with 18-21 year old kids. I lucked out and got a decent card. That isn't always the case, however.