Part of the provisions of the CARD Act, the law aimed at taming ethically suspect practices of charge card businesses, was restrictions on how credit cards could possibly be marketed to college students. Card corporations are now finding ways around that.
Still seeing too several credit cards
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 charge card companies and card issuing institutions from marketing heavily to college students, however they’re finding ways back onto campus, according to a recent article in the Wall Street Journal. It is now illegal for any promotional gifts to be offered to students. Still, they can give out signing bonuses such as the Citibank $50 bonus being offered. Students are still being marketed to on Facebook. By joining the Chase Facebook group, “karma” reward points are also offered.
Doing nothing wrong
Banks, not credit card corporations, offer most of the charge cards. For signing up for a checking or savings account, banks can give out promotional tings. This doesn’t make everybody happy. They see it as a canard. That same level is where marketing is from financial service businesses. The University of Houston Law Center did a survey of college students to find out that marketing to students is not typically on campus. About 73 percent is off of campus for advertising. Students are willing to skip the rules to get charge cards as well. That survey found that 29 percent of students used loan disbursements as proof of income in applying for credit cards.
Education costs
The increasing cost of attending a four-year university is an easy inducement for students to get charge cards to experience some comforts, like a meal consisting of more than macaroni and cheese. The debt from college is going up. Students are taking out more. 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 charge card debt, according to U.S. News and World Report. The highest average college debt seen ever has been carried with the class of 2011, the Time reports. A $22,900 average debt is carried by the class of 2011. From 2001, that’s a 47 percent increase while increasing even 8 percent from 2010.
Articles cited
Wall Street Journal
online.wsj.com/article/SB10001424052748704322804576303652621312770.html?mod=WSJ_PersonalFinance_FamilyFinance#articleTabs%3Darticle
Time
newsfeed.time.com/2011/05/11/congratulations-class-of-2011-youre-the-most-indebted-graduates-ever/
U.S. News
usnews.com/education/blogs/student-loan-ranger/2011/05/11/student-credit-card-use-could-cause-problems-later
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