Finally, the Credit CARD Act (click here for a complete summary of the Credit CARD Act) is showing signs of relief for students. As you may remember, the Credit CARD Act took effect on February 22, 2010 – it aimed to reform the entire credit card industry and change the credit card game for students, by instituting the following measures:
- Anyone under age 21 must have a cosigner on the account (unless they can prove sufficient income)
- Credit card companies cannot send pre-approved credit card offers to those under age 21 via mail.
- Credit card companies must stay 1,000 feet away from campus when trying to solicit/market cards to students.
- Creditors can no longer give out an incentive (free t-shirt, free lunch) to students if they apply for a credit card.
In 2009, according to the Federal Reserve, banks spent $84,462,765 to colleges, universities and institutions of higher education to promote student credit cards. And $73,261,906 in 2010 – that’s a drop of $11,200,859 or 13%. Additionally, the number of student credit card accounts that were opened as a result of this spending dropped by 13% (55,747 in 2009 vs. 46,360 in 2010).
This is a clear sign the CARD Act is actually working. It’s tougher to get a credit card if you’re under age 21. Also, students are catching on and realising that having numerous credit cards in college is dangerous.
Last year, Chase Bank was among the credit card companies (along with FIA Card Services) that spent the most money to universities and institutions to gain student credit card accounts ($13,892,862 for Chase Bank and $61,968,307 for FIA Card Services). In 2010, that spending dropped to $9,175,574 and $55,597,362, respectively. Even the credit card issuers are catching on – maybe it’s not the greatest idea to rip off students!
(As originally posted on HelpSaveMyDollars.com)