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The Federal Reserve has clarified some of the provisions of the new Credit CARD Act, particularly how it relates to credit card issuers on college campuses. On September 29 the Fed announced that “near” campus is officially 1,000 feet, or about the distance of three football fields. A number of other important details have been cleared up. So where do credit card issuers stand when it comes to appealing to college students on and near campuses?
Where is near campus exactly?
The Federal Reserve gave a clear definition to “near campus,” defining it at 1,000 feet. It was also explained that campus can also include related events like sporting events and concerts. It can be assumed that college football games will also see a ban on credit card merchandisers. Furthermore, mailing offers of inducements like gift cards is prohibited to students that live on or near campus.
What exactly are “prohibited inducements” and what does it mean?
The ban on any tangible items to induce credit card applications from college students could also do with some explaining. While the Act bans tangible items like T-shirts and gift cards, discounts, reward points and promotional terms do not apply. Items that are offered regardless of whether the student applies for the card or not are not considered inducement and thus are not banned under the Act. The only thing the Act explicitly prohibits is tangible goods given to college students on or near campus, as well as at sponsored events by a college institution.
What about co-signers for people under 21?
Originally only spouses, legal guardians and parents could be a co-signer for an individual under the age of 21. Now, however, the Federal Reserve has stated that any person over 21 that has sufficient means to repay debt incurred by the cardholder can legally co-sign. According to the Fed, sufficient means to repay the debt means the cardholder must provide financial information that proves their ability to pay off debt. Card issuers may request proof that includes salary, tips, self-employment income, alimony payments, public assistance and more. This proof may be requested from co-signers as well as applicants under 21.
Have changes been made to requests for credit limit increases?
Under the Act the cardholder can make a request for a credit limit increase only with written permission from the co-signer as they will need to agree to assume liability for the higher credit limit. If the co-signer makes the request, however, permission is not needed.