Credit card companies still marketing to college students

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Credit card companies are still able to get at college students despite tougher laws. Photo Credit: MoneyBlogNewz/Flickr/CC-BY-SA

Part of the provisions of the CARD Act, the law aimed at taming ethically suspect practices of credit card companies, was restrictions on how credit cards could be marketed to college students. Card companies are now finding ways around that.

Coeds can’t escape copious cadre of cards on campus

The Credit card Accountability, Responsibility and Disclosure Act was a concentrated effort by legislators to restrict credit card company practices that many people felt weren’t ethical. One of the provisions of the CARD Act was to prohibit credit card companies and card issuing institutions from marketing heavily to college students, but they are finding ways back onto campus, according to a recent article in the Wall Street Journal. The law prohibits any free promotional gifts to students, but that doesn’t prevent card issuers from offering other things like the $50 bonus for signing up for a card, as Citibank does. Chase decided to market to students on Facebook and offered “karma” reward points for friending the Chase Facebook group.

No laws broken

Most credit cards are issued by banks, not credit card or finance companies themselves. Banks are still allowed to hand out promotional literature for checking and savings accounts, just not credit cards. However, many people see that as a canard. Most marketing to students by financial services companies appears to be on the level, as a recent survey of college students by the University of Houston Law Center found 73 percent of credit card marketing to students didn’t take place on campus. Students are just as eager to skirt rules in order to get a credit card; the same survey found 29 percent of students who applied for a credit card used their student loan disbursement amounts as the proof of income required for students to get a credit card.

Financial burden of college increasing

The increasing cost of attending a four-year university is an easy inducement for students to get credit cards to experience some comforts, like a meal consisting of more than macaroni and cheese. More students go heavily into debt during college. The Sallie Mae foundation found that 92 percent of college students in 2009 charged an educational expense such as tuition or books and 20 percent of college seniors carried at least $7,000 in credit card debt, according to U.S. News and World Report. The class of 2011, according to Time, carries the highest average college debt ever seen. The class of 2011 carries a $22,900 debt burden on average. That’s an increase of 8 percent from 2010 and a 47 percent increase from 2001.


Wall Street Journal


U.S. News and World Report

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