Marketing Of Credit Cards No Longer Allowed On Campus

When the Credit CARD (Card Accountability, Responsibility and Disclosure) Act was drafted and signed into law earlier this year, one of the major concerns was how to keep young consumers from getting themselves into credit card debt trouble.

Studies initiated by Sallie Mae showed that college students were already in deep credit card debt trouble even before they graduated. As a result, the Credit CARD Act carried legislations specifically targeted at eliminating this problem.

For several years, credit card marketing in college campuses all over the nation has been very widespread. Credit card marketing practices were also very aggressive. Credit card companies would setup booths in college campuses and entice college students to sign up with them by luring them with gifts such as t-shirts and even consumer electronics.

LowCards.com chief executive Bill Hardekopf said, “Issuers have aggressively marketed cards to college students because they know that many parents will pay off the bill if the student runs up debt. In addition, brand loyalty is determined early in life, so many young cardholders keep their first card for many years”.

However, this lead to college students getting themselves in credit card debt trouble owing to their inability to manage their credit cards properly. According to Sallie Mae, the major student loan lender in the U.S., the average credit card balance among college students has now grown to $3,173.

This February, the Credit CARD Act is going to introduce changes that will hopefully correct this ominous problem. The act will primarily limit access to credit cards among college students or, generally, anyone under the age of 21. Anyone belonging in this age group who wants to apply for a credit card will either have to get a co-signer or to produce proof of their capability to meet their credit card payments.

The Credit CARD Act will also limit the solicitation of credit cards to consumers under 21 years of age. Credit card companies are prohibited from luring students into signing up with them by offering freebies in college campuses or near them. They are even prohibited from doing so in any event which are sponsored by colleges.

Nationwide, some banks have already begun to pull back from their college marketing efforts. American Bankers Association spokesman, Peter Garuccio said, “Particularly going into this semester, there were these new laws affecting not only marketing on college campuses but offering credit to people under 21”.

Garuccio also said that banks were uncertain of how the technicalities of the law’s implementation will be addressed by the Federal Reserve. He said that the uncertainty over the law’s implementation was enough for banks to pull back.