Incentives given to students who sign up for credit cards now gone
As of Monday, credit card companies across the nation can’t make you sign a credit card agreement just for free pizza.
Or anything else for that matter.
A major credit card reform act took effect at the beginning of this week, with several protections for teens and college students, who can be targets of credit card industry advertising.
The Credit Card Accountability, Responsibility and Disclosure Act, or CARD, prohibits issuing any new credit cards to someone under 21 unless they have a co-signer.
It also requires banks to give a reason for participating and advertising at events on college campuses and forbids them from giving out gifts to students who sign applications.
Jared Bernstein, economic adviser to Vice President Joe Biden, said schools will also have to disclose commissions they earn by letting credit card companies advertise on campuses.
According to student loan maker Nellie Mae, the average undergraduate has $2,169 in credit card debt. Bernstein said credit card debt can make it harder for graduating students to get jobs and can lower their credit scores before they make major purchases like mortgages or car loans.
“The intent here is to make sure these protections reach younger people because the consequences of credit card debt are so high,” Bernstein said in a conference call Tuesday.
President Barack Obama signed the bill into law last May as one of the first major legislative pieces of his administration. It enjoyed strong bipartisan support, passing by a House vote of 357-70 and a senate count of 90-5.
In a statement released Monday to mark the bill’s effective date, Obama emphasized the importance of the law’s consumer protections.
“For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs,” he said. “But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable.”
In a change that got slightly less coverage, the same bill now prohibits any ban on handgun possession in national parks. That amendment, which reverses a Reagan-era rule banning firearms, is unrelated to the credit card reforms but was passed as a rider to the bill, 67-29.