It has been found from a recent report that Bank of America has spent more money to recruit students for their credit card account, than any other bank. The FIA Card Services which is a unit of Bank of America ended up paying a whopping 62 million dollars to alumni associations and colleges to win the marketing rights for cards to members and students as per a report of the Federal Reserve. This number in fact expands to 83.5 million dollars when 1004 agreements between credit card issuers and colleges are considered. In fact, the affiliated groups and schools were paid by credit card issuers for ever student account opened. In all as many as 53,200 new accounts have been opened, although it is not sure how many of these belonged to students and how many to the faculty members.
As per the reports, Penn State Alumni Association, Harvard Alumni Association and the University of Michigan were the front runners as far as the number of accounts opened are concerned. Meanwhile, Chase Bank is the biggest spender after Bank of America, but its contribution if only 13.8 million dollars. US Bank has spent about 2.5 million dollars. These reports were made by Federal Reserve recently. The Credit Card Accountability and Responsibility and Disclosure Act or CARD Act had mandated the credit card companies to disclose the amounts paid to colleges and groups by card issuers and the number of new accounts opened. In other words it is the cost the companies take in order to recruit new borrowers from the campus.
The University of Notre Dame meanwhile turned out to be the school that got the biggest payment. It had received 1.8 million dollars from Chase, but managed to recruit only 77 new borrowers. Bank of America on the other hand spent 1.5 million dollars to pocket 659 new accounts from the University of Southern California. The amount of spending per every account varies wildly. Prior to the CARD Act, around 200,000 - 600,000 new accounts were opened on campuses and through alumni and affiliated groups. Even under normal circumstances, the amount spent has been found to be on the higher side. A major rule that could have contributed to the drop in new accounts is the prohibition for under-21 students to get new accounts without co-signers. Credit card companies can also entice new borrowers through giveaways only if they are 1000 feet away from the campus.