The CARD Act: College Student Consumer Protection or a Card Trick?

7 Tricks YOU Will Have to Teach Your College Student

The CARD Act refers to the Credit Card Accountability, Responsibility and Disclosure Act of 2009.  In a nut shell, the act was intended to protect college students from unscrupulous practices that ended up weighing down college students with debt that they had no way to repay.  That pizza they charged for $11.99 freshman would incur interest, and interest on the interest, not to mention late fees until they owed a couple hundred bucks on the pepperoni and cheese by their junior year.

What were the ground rules for credit card companies laid out by the Credit CARD Act?

The Act placed limits on the ability of those under the age 21 to get a credit card.  Or another way to look at it is that it limited the credit card company’s abilities to issue credit cards to college students under 21.

Credit card companies can no longer issue cards to students who cannot prove an income that allows them to repay the charges.  Other than this, college students will have to have a co-signer.  For college students, that means someone else to hold them accountable for their credit card debt and for credit card companies it means someone else to go after for the debt.

A new report released by the Federal Reserve does show some curtailing that can likely be correlated to the CARD Act. Payments to colleges and alumni associations made by credit card companies for the privilege of marketing to students or alumnus were down by 13% in 2010 and also after a year the total of new accounts opened by students dropped 17%.  It’s certainly a start.  Issuing credit cards to college students is still big business though because colleges raked in $73 million last year from credit card issuers.

Here are 7 things every college student should know about money, credit, debt and identity theft

Consider it Consumer Protection 101.  You won’t have to pay for this class.  You’ll just have to teach it so your college student doesn’t end up paying for costly mistakes.  Beverly Blair Herzog of is a former corporate CPA and admitted credit card “shopaholic” in younger days who turned to finance writing to help others.  Herzog says,  “Credit isn’t a bad thing. It’s the lack of knowledge about how it works that’s dangerous.”

1.  Balance your life AND your checkbook.

Sure they had this is Civics class in high school but research has shown that over a third of college students rarely, if ever, reconcile their credit card statements and or checking account balances.  This is an important life skill every college student needs to make a habit now.

2.  You can’t afford NOT to create a budget.

It sounds like a hassle for people with limited funds but college students really do need to know where there money is going.  Whether it’s books or beer, it needs to be in a budget.

3.  Know who WON’T be texting or e-mailing you.

Make sure your college student knows that banks and credit card companies will never text or e-mail you asking for logins, passwords or account numbers.  Scary messages that say you have a “breach” in security are usually trying to create one.

4.  Your social security number shouldn’t be Social.

After a rash of computer hacks and thefts, most colleges no longer use social security numbers as student i.d.  Your college student may not have been asked for their number in the past, other than for job applications or college applications but now they need to know that they need to protect their social security number to avoid identity theft and wrecked credit.

5. Passwords should be able to pass the security TEST.

Sure college students have a lot of things to remember including a new class schedule ever semester.  It’s tempting to go easy on yourself with passwords but this isn’t the place to skimp.  Don’t use your birthday, your girlfriends or boyfriends name, your favorite team or any passion that is easy to identity.  Always use a combination of letters and numbers and yes, you need different passwords for banking or other online accounts.

6.  Beware of what you POST.

Sure, college students should put a sticky note on their computer to remember mom’s birthday but posting your logins and passwords is tricky business.  The college experience is a collective learning experience and you don’t want to learn the hard way who might be trying to “collect” on you.

7.  Don’t throw your credit in the TRASH.

Whether or not a college student does decide to credit card, credit card companies will still be mailing them offers.  Yes, marketing strategies on college campuses might have changed but direct mailing is still a marketing strategy. College students shouldn’t just trash these offers.  They should be shredded and that goes double if you have a credit card and they send monthly checks to transfer balances, which can be used for anything.

All of the lessons of college life aren’t learned in the classroom.  Is your college student money savvy and credit smart?