College Student Credit Card Changes in the Law Governing College Student Credit Card Offers

The rules that meant to protect college student credit card was signed into law in May of 2009 by President Obama.

When the law was signed, it was emphasized that it aimed to uphold the basic standard concerning fairness and accountability.

President Obama said further that credit card is a valuable tool for the consumers, and decried the unfair billing practices transforming credit card from being a lifeline into an anchor.

The bill is considered a significant legislation that was passed in order to rein over the credit card industry.

However, comments stated that the bill only addressed some concerns, but not all the controversial practices that are going-on in campuses.

A Closer Look at the May 2009 “Credit Card Options For College Students” Legislation

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The said credit-card legislation is supposed to offer a pack of protection to cardholders.

Accordingly, it disallows some of the most controversial billing practices in the credit card business.

An example is credit card issuers cannot raise their interest rates on the cardholder’s balances not unless it reaches sixty days overdue.

In addition, it requires the companies to provide the customers an ample notice of forty-five days prior to rising of rates.

Moreover, the law addresses major abuses on college student credit card.

The rule imposes that without a co-signer, college students who are under twenty-one years old would be limited to what amounts to a card-training wheel, having restriction to twenty-percent of student’s income.

Under the law, college students will be protected by the co-signer from any sudden rate increase.

What the “College Student Credit Card Offers” Law must have overlooked

Analysts said that the law does not address some controversy involving college student credit card.

One of the most notable is on the affinity card contracts that encourage universities and colleges in selling students’ information to card companies.

The confidential contracts bond schools with card companies that are willing to sign up students.

The credit card companies give some financial rewards to the school when the students used their cards frequently.

As an example, the students of University of Michigan might not be aware that their contact information including e-mail addresses worth USD $25.5 million.

This is the total amount that the Bank of America is giving the Alumni Association of Michigan for an eleven-year affinity-card-contract in exchange for marketing school-branded credit cards to the students, sport fans and alumni.

The deal forged with the Michigan Alumni Association is 0.5% of the total purchases made using the school-branded credit cards.

The Michigan University is not the only one that has contracts with the credit companies involving rewards for providing students’ information to make them as possible customers.

The Conclusion of the “Credit Card Offers For College Students” Rules

  1. In applying the rules, banks will not be able to raise the rates on the outstanding balances not unless the cardholder is sixty days late with his payment.
  2. Furthermore, although consumers may be late in their payments and became subjected to rate increase, the law provides them with an escape.
  3. It the cardholders were able to pay on time in the succeeding months, the credit card company should restore the lower rate at once.
  4. Additionally, the law eliminates the fees when paying the balances online.

With the law in place, more flexibility is expected for card consumers especially college student credit card holders.