AT&T's giant credit card unit has joined the ranks of issuers who will be courting America's 12 million college students when they arrive for classes in the next couple of weeks.

AT&T Universal Card Services Corp. recently contracted with Philadelphia-based Campus Dimensions Inc. to set up promotional tables at more than 550 colleges and universities across the country.

Viewed as Growth Area

The Jacksonville, Fla.-based credit card arm of American Telephone and Telegraph Co. is counting on its no-fee-for-life offer and some unique educational features to be as attractive to students as its no-fee cards have been to the general population.

AT&T's representatives will be competing with national issuers - such as Citicorp, Household International, and Chase Manhattan Corp. - that regard college campuses as one of the few remaining fertile areas for account growth.

"It's the best market for rejuvenating the business," said Stephen Szekeley, vice president, credit card research, at Tampa, Fla.-based PSI. "The college student of today is a good credit card customer."

AT&T's college student cardholders will receive information on how to build credit history and on the importance of paying monthly bills. They will be shown how to calculate payments based on annual percentage rates, and what grace periods and credit lines are.

Trying to Foster Responsibility

"It's important that they learn to use [credit] responsibly," said Dotti Schechter, senior vice president of credit card marketing at AT&T.

She said AT&T has set the minimum payment on revolving accounts higher - 2.5% of the balance instead of 2. 1 % - to help students who choose to revolve their debt to pay off balances sooner.

Initially, she said, new college cardholders will be granted limited lines of credit, with the ceiling rising as students establish solid payment histories. At the first sign of delinquency, AT&T Universal Card will send out a customized letter reminding the student of the importance of good credit.

Like AT&T's standard cards, the AT&T Universal Mastercard for students has no annual fee and a 15.9% variable interest rate. The card also functions as a calling card and automated teller card.

College students were targeted first in 1978 by American Express Travel Related Services.

Over time, American Express found students to be some of its best and most loyal customers, a spokeswoman said. Because American Express' charge card customers pay their balances in full, she said, there's no danger of a student spending to the limit and paying minimum balances.

Bank card issuers initially saw limited potential in college programs, thinking profits would be too slim because students had limited funds and would carry small balances.

But that view has changed, said Bernard Pasierb, senior vice president of Financial Reserve Corp., an East Haven, Conn., firm that has marketed cards to students for American Express, Chase, and Chemical Banking Corp.

"Over time the major issuers have become confident with the risk associated with the market."

Rather than do mass mailings, many issuers set up booths and take-one displays in bookstores and common areas and on bulletin boards. Students are more likely to become interested in the product this way, Mr. Pasierb said. "You're getting to them where they live, where they go to school."

'Can They Handle It?'

But there is a downside. "They are being inundated with a lot of offers," he said. "Yes, it represents a fertile market, but as people start getting presented with more offers, the question becomes, Can they handle it?"

The cost per card is higher at the outset, Mr. Pasierb said, because students move around a lot. Also, issuers may lose some customers who sign up just for the promotion then cancel their cards.

Overall, however, he said credit card programs for college students can be profitable - and establish banking relationships that last for a lifetime.

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