How the 2009 CARD ACT Affects College Students in 2012
The Credit CARD Act of 2009 brought about a number of changes in how credit card companies can conduct business properly. A number of these changes, including the ability to apply for and receive a credit card, directly affect college students now in 2012. Pre-paid debit card companies are taking advantage of the “gaps” left by the 2009 CARD Act. How are students finding credit?
UPDATE:
College students who are ready to apply for a credit card, start homepage StudentCreditCards.com
If you are looking for a prepaid credit card, visit PrepaidDebitCards.net
The CARD Act of 2009 is also known as the Credit Card Accountability Responsibility and Disclosure Act of 2009. When President Barack Obama signed the Act on May 22, 2009, credit card companies had to make a number of changes in their business practices effective immediately. These changes included prior notification to customers of interest rate increases, and “rewarding” rather “punishing” customers for on-time payments, just to cite a couple of examples. Two changes in particular, however, directly affects students—including those who are still in high school as well as college students.
The Credit CARD Act of 2009 now prohibits the issuance of a credit card to anyone under the age of 21, unless the application is co-signed by another credit-worthy person who is 21 years old or older, or unless the under-21 applicant can show proof that he or she can make payments on the balance.
Additionally, The Credit CARD Act of 2009 makes it necessary for financial organizations, which back credit cards to provide reasons for offering opportunities for college students to sign up for credit cards at on-campus locations or at campus-sponsored events. Further, even if a bank receives permission to solicit credit card applications, it cannot “sweeten the deal”—that is, make it more enticing to sign up for a credit card, by offering promotional items or gifts of any kind. This was a major selling point for many credit card companies.
As a result of these changes, pre-paid debit card companies have stepped in to “fill the gap” by increasing their presence and availability on and around college campuses. (Pre-paid debit cards are different from credit cards in that the cards are “loaded” with a preset amount of money. Once the money that was originally placed on the card has been spent, the card must be “reloaded” [more money has to be deposited on the card] before card use can continue). Prepaid cards have gotten so popular Suze Orman has launched the Approved Card, as reported by http WSJ MarketWatch – See http://www.marketwatch.com/story/suze-orman-debit-card-raises-many-doubts-2012-01-13
So how are college students finding credit, as a credit card may still be the right choice for certain individuals. Credit card offers for students are readily available online. Dave Oz, president of studentcreditcards.com , reported the website has seen a 100% increase in web traffic since the CARD ACT started in February 22, 2010. Oz said of his site “No incentives of any kind are offered. On our site students and parents can find articles written by financial experts and reviews and comparisons of credit cards currently available to college students.” Let’s hope this makes a dent in reducing paper usage by helping eliminate paper applications.
What does the future hold?
One theory: More gravitation toward prepaid re-loadable cards, combined pay-pal’s growth, mixed with new and old legislation, could open a back door into the first real trajectory toward monies transacted regularly via mobile phones. One day plastic cards could go the way of the dinosaur.
Student credit cards.com @ January 14, 2012