According to the CARD Act a whole set of new regulations had come into force as there were fresh limitations that were placed on the financial services industry which included the capping of many fees, interest rates charged on balances, etc. The student credit card offers also have new limitations as per the CARD Act.
Banks have always tried to entice young, unsuspecting adults with offers of T-shirts, food etc in exchange for applying for credit cards. This dangerous trend got youngsters into a huge debt cycle and banks used the opportunity to earn huge interest as well as free revenue and earned profits in the bargain. This practice was to come to an end with the new regulations as per the CARD Act as banks were not allowed to dangle these freebies to students who fill in credit card applications. There were camps organized within the college campus earlier, but as per the new Act only those over the age of 21 can apply for the card, or they will have to show proof of income or get a co-signatory to obtain a card.
However, the CARD Act seems to have done little as card companies are still marketing on campuses and students are still applying for credit cards quite easily.
In spite of the regulations of the Act, out of the 338 students who were surveyed, almost 76% of the students admitted to having received card offers in 2010. There are no results of a similar survey conducted the previous year and hence a comparison of the results cannot be done.
In spite of the new rules that have banned card companies from enticing students with freebies, the CARD Act seems to have done very little in terms of implementation as the evidence indicates that card companies have not yet given up on students. There are some gaping loopholes in the legislation that needs to be blamed. The rule prohibits from offering any ‘tangible item’ but does not prohibit creditors from mailing applications to college students at any address that is on campus or near the campus. However, an e-mail does not have any physical address and could exist anywhere and is therefore not considered an address near campus.
The income proof that the students have to furnish is also not specified properly according to the CARD Act, and students have shown student loans as income, which is shocking.