Credit Card Accountability, Responsibility and Disclosure (CARD) Act
Limits Credit Cards to Teens Credit cards for students cannot be issued to someone under age 21, unless they have a co-signer (who is 21 or over), or can provide proof of a means to repay.
College Bank Curtailment Requires banks to provide a reason for participating on college campuses and at university-themed events. Outlaws banks giving gifts or any promotional items (such as coupons for free pizza) to entice debtors to take on debt by signing with their Credit cards for students.
The act aims to overhaul the Credit cards for students industry in an effort to protect consumers in light of such economic turmoil as the subprime mortgage fallout. The CARD Act is under the purview of the Federal Trade Commission (FTC) and includes portions that are directly aimed at college students.
Cosigner Regulation Under the CARD Act, credit card applicants under the age of 21 must provide evidence that they can repay accrued debt. If they cannot provide such evidence, which would include proof of employment and income statements, then they must provide a cosigner who can vouch to pay for any debt. This means that if a college student's parents act as cosigners on the student's card, the parents are responsible for paying the debt in the event the college student is unable to.
Marketing Regulations Whereas credit card companies used to freely market on college campuses, providing promotional incentives, such as coupons, T-shirts and key chains, the new CARD Act seeks to restrict such marketing tactics in the interest of the students. Under the law, the offering of free gifts as incentives to students to sign up for a credit card is banned if conducted within 1,000 feet of campus. This regulation is established to curb pressure placed on students to sign up for credit cards.
Credit cards for students Offer Regulation Credit card companies are banned from issuing credit cards to those under 21 if the credit card recipient has not applied for the card initially. Prior to the CARD Act, credit card companies could issue credit cards to students without an application. This ensures that only students who go through the application process to get a credit card receive a credit card.
Credit Limits Under the CARD Act, student credit cards have strict credit limits that creditors must comply with. Specifically, the credit line of a single card must not exceed $500 or 20 percent of the student's annual income. In addition, the credit line from all of Credit cards for students must be limited to 30 percent of the student's annual income in the event there is no cosigner.
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