Credit Card Use Dropping On College Campuses
The number of new college credit card accounts dropped 17 percent from 2009 to 2010, a new report by the Federal Reserve Bureau found. The drop was due in part to 2009’s Credit Card Accountability Responsibility & Disclosure Act, which was designed to prohibit credit card companies’ solicitations of college students.
Regulators hope these measures help CARD reach its ultimate goal of keeping students, who typically have little income, from racking up credit card debt on top of student loans. Among other measures, the act bans companies from offering cards to anyone younger than 21 and prohibits offering gifts to students opening an account, according to the FRB.
CARD also requires issuers to divulge agreements made with universities, alumni groups and related organizations. In 2010, roughly 37 percent of agreements in effect were between an issuer and an institution of higher education, and 36 were between an issuer and alumni association affiliated with an institution, according to the report; roughly 7 percent were with affiliated foundations and 17 percent with other organizations.
“Just the 'sunshine' on the card agreements called for with the public reports is a great way to shame the universities from profiting off of making students debtors, and it seems to be working,” Linda Sherry, national priorities director for nonprofit Consumer Action, told the Chicago Tribune.