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This case is available in MyFinanceLab.
Maria will be a college sophomore next year and she is determined to have her own credit card. She will not be employed during the school year but is convinced that she can pay for credit card expenses based on her summer earnings. Maria’s parents have read a number of articles about the problems of credit cards and college students, including examples of students leaving school after a downward spiral of credit cards, overspending, working to pay bills, worrying about bills, working more hours to pay bills, and eventually withdrawing from school. When Maria showed up with a handful of applications including Visa, a Gold MasterCard, Discover, a Visa sponsored by her university, an American Express, a secured MasterCard, and a gas company card her parents were overwhelmed. Maria admitted she didn’t want them all. “I’m not stupid,” she declared. Since Maria obviously needed to learn about credit cards, her parents agreed to cosign her application on one condition. She had to approach her choice just as she would a class project and research the following questions.
Based on the analysis in question 4, what class(es) of credit cards, if any, should Maria seriously consider? What other products, if any, might she consider applying for?
Once M receives a “preapproved” offer for a standard card, she must very carefully compare the actual information of the account with that guaranteed in the “preapproved” offer. The credit card might have provided her a card with less favorable rates on the basis of her credit history and the information written on the application. If variation exists between the initially offered rates and the provided rate, she should contact the issuing bank or company to close the account and should not activate the card.