THIS PAGE MAY CONTAIN AFFILIATE LINKS. MEANING WE RECEIVE COMMISSIONS FOR PURCHASES MADE THROUGH THOSE LINKS, AT NO COST TO YOU. PLEASE READ OUR DISCLOSURE FOR MORE INFO.
Credit Shout may collect a share of sales or other compensation from the links on this page.
College students are one of the prime targets of credit card offers today. Unfortunately, thousands of students go off to school each year unprepared for the temptation of credit useand responsibility required. This has lead to studies that show the average graduate from college carries over $4,000 in credit card debt, along with thousands in student loans. Fighting credit card debt–especially with college-aged individuals–has become a top priority in this country, in part thanks to President Obama’s Credit CARD Act, which starts to go into effect next week.
Illinois is now the newest state to take a stance against the unfair practices of the credit card industry by introducing new legislation to prevent consumer abuse. In Illinois, Governor Pat Quinn signed into law a bill that will put more restrictions on lenders that market to students on Illinois campuses.
This new law, called The Credit Marketing Act and drafted by the Treasurer Alexi Giannoulias, doesn’t prevent credit card companies from approaching students on campus completely. Instead, the law tries to find a middle ground and a way to make practices fair when marketing to college students. Set to go into effect in January of 2010, the law will ban credit card companies from giving out “teaser gifts” like blankets, t-shirts, pizza and merchandise to anyone that’s willing to fill out a credit card application. Also, Illinois colleges and universities will be prohibited from making agreements with lenders unless they’ve given students financial education. Lastly, the new law will prevent colleges from selling the information of students under the age of 21 for any reason. Penalties up to $1,000 will be given out for the violation of any of the terms of this new law.
It’s well known that credit card companies are experts at using free gifts, food and discounts to convince students that are often low on cash to fill out applications for credit cards. These credit cards they’re offered usually have very low introductory APRS which go sky-high six months later and carry a number of hidden fees.
This new legislation was sponsored by State Senator Donne Trotter and State Representative Kevin Joyce. Governor Quinn stated the importance of protecting young students from the all too common aggressive marketing strategies of predatory lenders, saying these young people are vulnerable to such tactics. Of course, Mastercard and Visa opposed the new law, although they did not comment on it specifically. Supporters for the bill included the Illinois Bankers Association, the Federation of Independent Illinois Colleges & Universities, the University of Illinois and others.
The targeting of young college students for credit cards has been a growing problem and it’s a relief to see if finally being addressed across the country. This new bill of course coincides with the Credit CARD Act of 2009 which will offer further protection to young consumers. Come February of 2010, anyone under the age of 21 will need parental approval before applying for a credit card, along with proof of sufficient income. While credit card reform isn’t complete, major steps are being taken to clean up an industry that has been taking advantage of consumers for decades. Beginning next year consumers will begin to experience credit more as it should exist: without hidden fees, negative amortization on debt, and unfair business practices.