Pay for College, Resources

Most College Credit Cards Leave Students Unprotected

0 Comments 25 January 2017

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Many colleges fail to monitor credit card and financial programs marketed to students, leaving campus officials largely in the dark about whether these programs are in a student’s best interest. The programs can prey on students, costing them hundreds of dollars in fees and penalties.

According to the Consumer Financial Protection Bureau’s Student Banking Report, on-campus financial institutions play a significant role in supporting a student’s financial stability. When a college fails to provide support, a student might not be equipped to handle unexpected fees or charges. This could impact a student’s ability to pay tuition and other costs related to higher education.

Many colleges do not take advantage of their rights under credit card and financial partnerships. They usually decline to receive information about student credit card use and the management of financial programs. They also turn a blind eye to student complaints.

Forty percent of college students — more than 10 million — attend a college or university with an on-campus bank.

To help make students aware of the pitfalls of on-campus banks and credit cards, the Consumer Financial Protection Bureau called for financial institutions to disclose consumer agreements on their websites. The bureau also launched an initiative to help colleges evaluate the economic effects of on-campus banks and affiliated credit cards.

The market for college credit cards, however, is declining. In 2015, the bureau reported a 21 percent decline in credit-card agreements from the previous year.

The Credit Card Accountability, Responsibility and Disclosure Act includes a section that intends to bring greater transparency to the college credit-card market. It includes:

  • Credit-card issuers must submit the terms and conditions of college credit cards
  • Credit-card issuers cannot provide cards to students under 21 who do not provide proof that they will be able to make payments
  • Prescreened offers of credit cannot be marketed to students under 21 without their consent

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