On Monday, the Federal Reserve Board released a new report that reveals the details of credit card marketing deals, including payments, between credit card issuers and universities or higher education-affiliated organizations, such as alumni associations or foundations. The Credit Card Accountability, Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act, requires credit card issuers to submit an annual report to the Federal Reserve Board detailing the terms and conditions of any business, marketing and promotional agreements with higher education institutions or affiliated organizations "with respect to any college student credit card issued to a college student at such institution."
As part of that annual report, issuers have to disclose the amount of any payments to the school or organization, as well as the number of accounts opened. The Fed then has to post an annual analysis of all the reports.
This first report-of-reports from the Fed covers 1,044 college credit card agreements from 17 credit card issuers. Here are some of the highlights from it:
- In 2009, credit card issuers paid a grand total of nearly $83.5 million to colleges or related organizations.
- Last year, 53,164 new credit card accounts were opened under these agreements.
- Three card issuers accounted for nearly 96 percent of all the agreements submitted to the Fed: U.S. Bank National Association ND, Chase Bank USA, N.A., and FIA Card Services, N.A., which is a subsidiary of Bank of America. FIA submitted the most agreements by far, at 906. U.S. Bank turned in 60 agreements, followed by Chase with 36 agreements.
- The largest payment was from FIA Card Services to the University of Illinois Alumni Association, which received $3,272,457 under its college credit card agreement in 2009.
- The Penn State Alumni Association had the highest number of credit card accounts opened in 2009 through its agreement with FIA at 74,832.
Want to see how much your alma mater profited last year from its college credit card marketing agreement? You can search for a particular agreement through the Fed's new online database by card issuer, name of the institution or organization, or the city and state where the school or organization is located.
On top of having to publicly disclose marketing contracts with colleges, credit card issuers are now prohibited from offering a tangible item, such as free pizza or t-shirts, to students on or near a college campus in exchange for completing a credit card application. They also cannot issue a credit card to a person under the age of 21 that doesn't have sufficient income, assets or a co-signer.
Do you think the law is protecting youth from credit cards or unfairly making it harder for young people to build credit?
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