Despite the CARD Act, which explicitly prohibits banks from marketing and issuing credit cards to young adults under the age of 21 without a cosigner or proof of sufficient income to repay the debt, banks are not complying. At least, that’s what new research from the University of Houston suggests. Professor Jim Hawkins surveyed 338 students from three undergraduate history classes and found some pretty alarming feedback.
According to Professor Hawkins’ study:
- Mail solicitations continue. Seventy-six percent of students under 21 reported having received a credit card offer since the beginning of 2010.
- Student loans suffice as “means.” Banks can issue credit cards to young adults under 21 if the consumer himself can demonstrate “an independent means of repaying” the potential debt. It seems student loans are being considered sufficient “means,” as a full 29 percent of students under 21 who obtained a credit card since school began this past fall used student loan proceeds as part of the income they reported to credit card companies when applying for the card.
- On-campus marketing alive. Thirty-two percent of freshman report seeing credit card companies marketing on campus. As for the chachkis? Forty-seven percent of freshman report seeing credit card companies offering tangible gifts.
If you’re a current student and have seen credit card issuers on campus recently, we want to hear from you. Post and share your stories in the comments section below.