Lenders take advantage of loopholes in student credit card laws
Many of the nation’s largest lenders are circumventing laws drafted to protect students from the perils of high credit card debt by offering different types of giveaways.
Loopholes in the Credit Card Accountability, Responsibility and Disclosure Act have allowed many of the nation’s top credit card issuers to still offer promotional items to college students under the age of 21 in the hopes that they will open new accounts, the Wall Street Journal reports.
In particular, they are exploiting a part of the regulations that only prohibit the offering of a “tangible item” as a promotion, the report said. In the past, t-shirts and other small items were popular giveaway items, but now lenders have moved onto account credits and online coupons which do not qualify as tangible.
“It’s a distinction without a real difference,” Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group, told the newspaper.
A recent study found that average students are now graduating from college with 4.6 credit cards in their names and $4,100 in debt.