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College credit cards and loopholes in CARD Act


Student loans, except in a few rare instances where a severe personal hardship can be proven and allowed by a judge, are not dischargeable in bankruptcy. Thankfully, student credit cards can be discharged in a Chapter 7, because banks work tirelessly to contribute to the spending habits of America’s college students.

The overarching appeal of the college lifestyle to credit card companies is the irresponsible approach (no offense) most 18 to 22-year-olds employ toward handling money. Hey, it’s just how it is.

It is also key for banks to establish a relationship with young adults early, often as soon as they turn 18. However, the recently passed CARD Act, which applied a number of limits on the marketing reach of lenders, also addressed the age at which a person can acquire a card. Well, as you might expect, credit card companies have found a few loopholes in the new laws. Or more accurately stated, the credit card companies have found a few craters in the new laws.

The CARD Act says that people under 18 years of age need a co-signer. Some read that as meaning they need mom and dad to sign. Okay, sure, the more responsible kids will see that, bring it to mom and hopefully, she’ll provide some insight on the risks of debt and deny the request. (Along with a stern warning about the dangers of binge drinking).

Seriously though, what is being reported happening around the country is that younger college kids are getting older classmates, roommates and fraternity brothers and sorority sisters to perform as co-signers. And, such action is also being encouraged by the folks who stand at the little kiosks barking out the benefits of plastic.

But wait, doesn’t the CARD Act also state that credit card companies can no longer hawk their wares on campus? Not really. It only says they have to disclose how much money they spend on doing so. So sure, there’s some added bureaucracy, but it’s completely worth it.

Last year, Bank of America spent more than any other bank on marketing efforts to reach college students. Their big campaign involved forking over $62 million for the right to market their credit cards to kids on campus and alumni associations. On the University of Southern California’s campus, the bank invested $1.5 million in attracting 659 new accounts. The total amount invested for all banks to get on college campuses last year, as reported by the Federal Reserve, was $82.4 million, which resulted in just over 53,000 new student credit cards.

Struggling with credit card debt? Bankruptcy is your fresh start. Call the Law Offices of John T. Orcutt at 1-800-499-1818 today to schedule your free initial debt consultation.

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