Credit Cardholder's Bill of Rights includes special protections for college students

Posted by Joe on June 8th, 2009

While the Credit Cardholder's Bill of Rights offer protections for all Americans, there are a few amendments that specifically designed to help prevent college students from racking up thousands of dollars of debt while they are still undergrads.

First, there are much more strict limits on the amount of credit that can be offered up to a college student by an issuing bank. A student without a co-signer is limited to the greater of 20% of that students annual income or $500. While this may limit some students access to credit, it ensures that the particular individual is not put in a position where they have more spending power than they are reasonable able to pay back. We believe this should help most students develop positive credit usage habits and prevent heaps of unpaid debt from racking up.

Next, banks are prohibited from providing inducements to students in exchange for completing a credit card application. Anyone who has spent any time on a college campus over the last two decades knows how common the practice of providing incentives such as t-shirts, mugs, hats or even candy bars in exchange for signing up for a credit card. We see this as a positive move in that it removes a certain level of frivolity from the process of signing up for a credit card.

Finally, banks must disclose the terms of so called "affinity agreements" between credit card issuing banks and universities. These agreements typically give a bank exclusive rights to market credit cards with the college or university's logos to students and alumni in exchange for marketing fees. This is good for several reasons, but probably the most important has to do with privacy. Often affinity agreements allow banks to have access to significant amounts of personal information and we think it is good that this part of the bill of rights allows students to know exactly how their information may be used by outside parties.

You can learn more about credit cards for college students and tools to monitor credit reports and scores by reading our reviews and comparisons.