US PIRG consumer program director Ed Mierzwinski related recently the implications of the new CARD Act. In focusing on one of its provisions, Mierzwinski says that the CARD act mandates credit card companies to fully disclose the amount they give to different colleges and universities across the country in exchange for gaining access to the market of students, alumni, and organizations.
This is of particular interest to Mierzwinski because the matter involves individuals aged 21 and below who are less financially stable than their older counterparts. Mierzwinski states that this is indeed a vulnerable market, those which can be easily attracted by the marketing techniques of the credit card companies (given the high costs of their education expenses) but also the ones who may be less capable of high risk financial management.
This is why Mierzwinski says that the Federal Reserve Board’s reports can be encouraging when it comes to limiting what the credit card industry can do in the colleges and universities and in terms of educating vulnerable markets on their decisions.
Mierzwinski says that the mandate for credit card companies to submit contracts for Federal Reserve transparency regulations and annual monitoring has, for its effect, decreased affinity card programs between colleges or universities and the credit card industries.
Although the decrease in the number of such programs can be considered rather rapid by looking at figures for two previous months, the full extent of the effect of the CARD Act can be better analyzed when we compare the decrease this year to the figures for exactly the same period next year.
For now, Mierzwinski attributes the decrease in such programs to the existing external pressures by concerned consumer and student groups and organizations.
Mierzwinski opines that the CARD Act eliminates deals and contracts which had previously been averse to public scrutiny. As an effect, contracts either gear towards better directions or are removed from the market altogether.
For Mierzwinski, the credit cards should offer to the student’s opportunities for improving good credit scores early on in order to enable young consumers to avail of car loans and mortgages once they’re already absorbed in the job industries.
That purpose, he adds, can be better served by the CARD Act as it obliges credit card companies to be more transparent in their dealings with their market.
Mierzwinski concludes that in the long run, we shall see how the CARD act can change the practices in the credit card industry.