NAICU Washington Update

New Law Imposes Special Credit Card Restrictions on College Students

May 31, 2009

The credit card law signed on May 22 is intended to protect consumers from ramped-up interest rates and fees.  But buried in the Credit CARD (Card Accountability, Responsibility, and Disclosure) Act of 2009 are several provisions that will limit access to credit cards by minors - especially college students - and will make public details of colleges' agreements with credit card companies. 

The new law prohibits issuing credit cards to those under age 21 without a cosigner or proof of independent means to repay credit card obligations.  Any increase in the card's credit limit also requires written approval - and assumption of joint liability - by "a parent, legal guardian, or spouse of the consumer," or other responsible person.

Colleges must publicly disclose "any contract or other agreement, made with a card issuer or creditor for the purpose of marketing a credit card."  Credit card companies may not offer college students any tangible item as an inducement to apply, if the offer is made in connection with an event sponsored by, or related to, the college.

In a "Sense-of-Congress" provision, the bill encourages colleges to:

  • Have card issuers notify the college where they will be marketing credit cards on campus.
  • Limit the number of campus locations used for credit card marketing.
  • Include credit card and debt education in new student orientation.

Companies issuing credit cards now will have to submit an annual report to the Federal Reserve System showing - by institution - details of agreement terms and conditions, including college affinity card agreements. These reports will include any memoranda of understanding between the creditor and the organization, payments received, number of credit card accounts, and other information.  The reports to the Federal Reserve will be submitted to Congress and made public. 

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