THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, December 24, 1994 TAG: 9412240298
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 72 lines
What began as a discussion of ways a local bank might help Tidewater Community College students has evolved into a credit card that allows TCC students to defer their tuition payments.
TCC and Heritage Bank & Trust of Norfolk have launched a MasterCard credit card with no annual fee and a below-average interest rate of 14.88 percent on balances carried beyond a 25-day grace period.
In addition to offering students some flexibility when paying tuition, the card program will provide the college with a percentage of the interest income that Heritage Bank earns on the card-users' balances.
The impetus for the card was TCC president Larry L. Whitworth, who sought ways to help students stretch out their tuition payments, said Robert J. Keogh, president and chief executive officer of Heritage Bank.
During informal discussions that began more than a year ago, he and Whitworth settled on a method of deferring payments by means of a credit card, Keogh said.
TCC students who use the card to pay their tuition for the semester beginning in January will be billed in three equal installments in February, March and April. If they pay each installment within the card's 25-day grace period, they will not pay interest on the tuition they owe.
The new card fits into TCC's effort to have students enroll for courses and pay for them by using a touch-tone telephone, said Bill Candler, TCC's communications director.
Deferring tuition payments through the card program may create some added work for TCC's accounting department, but that will be offset by greater use of payment by telephone and fewer student visits to the college business office, Candler said.
As competition in the credit-card industry became more heated in the 1980s, large card-issuing banks began hooking up with colleges and universities around the country. Banks put a school's name and colors on a MasterCard or VISA card and solicited applications from alumni. In return, banks provided the school with some remuneration, such as a portion of what they earned on the card.
However, Keogh said that the TCC-Heritage card was the only college-affiliated card that he knew of with a tuition-deferral feature.
Solicitations for the new TCC card were mailed to students earlier this month, and Heritage has received about a thousand applications so far, Keogh said.
During a given semester, between 17,000 and 18,000 students are enrolled at TCC, which has facilities in Portsmouth, Chesapeake, Virginia Beach and Norfolk. The bank plans to eventually offer the card to TCC's 1,000 employees.
In addition to the interest income that the new card will generate for the bank, the card should open up lending opportunities for Heritage among TCC students, Keogh said.
``We find that the average age of the TCC student is 29, that most are working, and attending school part-time to get better at something, whether it's math, English or a job skill,'' he said.
Those characteristics suggest that many TCC students are good credit risks and may be seeking loans for homes, cars and other needs, Keogh said. Still, the bank is making a ``leap of faith'' because this type of card program is untested, he added.
Keogh said that Heritage will handle credit decisions for the card. Processing will be done by a Florida company that the bank already uses for its other credit cards.
Depending on the number of TCC cards issued, the bank may add as many as three people to its 30-person work force to handle the work, Keogh said. The ``KeyCard'' name on the TCC-Heritage card and its wave-like design on the face were designed by the TCC staff. by CNB