Card Issuers Scale Back On Student Credit Cards


There once was a time when credit card issuers would sign up college students, issuing credit lines to them well before they were ready to graduate. Some students showed a limited amount of income and were still approved, while others were able to open up accounts with a parent acting as co-signatory. In some circumstances students received cards with no proof of income, putting themselves in a precarious financial state while still in college.

No Easy Credit

credit cardsThanks to the financial bubble burst of 2008, easy credit is a thing of the past, especially for people who have no means to repay their debt. Certainly, if your credit is very good or excellent, then you may still get approved for a new credit card, but that also means that you must have the financial wherewithal right now to make payments. Clearly, most college students do not and are often saddled with other debt including student loans.

Changes in consumer credit laws are also weighing in. Earlier this year Congress passed legislation that  was signed into law by President Obama putting new teeth into consumer protection including restricting card issuers who market their cards on campus.

Law Takes Effect February 2010

Some parts of the new law are already taking effect but by February 2010, college students who apply for credit cards will find additional roadblocks in place. These include proof of income, the ability to repay the loan, and if under the age of 21, have a parent or other responsible party cosign the application. This will also mean that if the student defaults on payments, then the creditor will turn to the cosigner to pay the debt.

The new law will also forbid credit card issuers from giving away on campus freebies including pizza and tee shirts to corral students. And, it will also curtail sudden increases in interest rates, moves which have scuttled the creditworthiness of many students down through the years.

Watch Out For Affinity Cards

What the law won’t protect students from are those affinity card contracts where schools sell student information to card issuers in exchange for a sizable fee. For example, the Michigan Alumni Association gets a cut in on credit card purchases for people holding its card, amounting to millions of dollars over several years. That practice is still in place, so be careful – your own college could be picking your pocket!

Of course, without easy credit available, students will have to watch their dollars and cents closely, but that will only serve to help them later on in life when they purchase a new car, buy a home or make some other major consumer purchase requiring financing.

Adv. — Are you heading off to college this month? If so, visit for tips and related information to help make your transition a smooth one. Check out to help you to save money on the things you want to buy.


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Categories: College Budgeting