Date: June 10, 2009 (Revised October 22, 2009) HEADLINE: BANKS MAKE MAJOR MOVE TO REPLACE CREDIT CARD COMPANIES ON AMERICA’S COLLEGE CAMPUSES WITH STUDENT ID/DEBIT CARD COMBINATION Just When You Thought The New Credit Reform Act of 2009 Was Going to Keep Your College Student Free of Credit Cards, The Banks Are Bringing A New Game For Our College Students To Play.
Before you get too excited about the prospect that your children will leave college with no credit card debt, there is another shark in the water waiting to consume our college students and their monies for college.Currently this new ID combination is already being used in over 120 college campuses across America (See link below to see if your college is there).
What the government has taken away with the new credit card law, the banks (new sharks) has or will be given it all back to the students. But this danger could be even worse than credit cards. Why do you think Capital One went in the banking business? Why do you think Citigroup/Citibank bought Wacovia Bank last year during the bank failures? Why did Wells Fargo battle so vigorously against Citgroup for Wachovia Bank? To answer your questions, please go to this link: http://www.cr80news.com/2009/05/21/despite-economy-campus-banking-partnerships-grow Wells Fargo already had twenty-four (24) college campuses signed up for these new “StudentID/Debit Card”.Wacovia Bank had sixteen (16) colleges.If Wells Fargo had been successful, they would be the largest bank in the nation with forty colleges which would be more than U.S. Bank who has thirty-seven as of December 2008. In an article published by SmartMoney Magazine ("10 Things Your Bank Won't Tell You", written by Jim Rendon, dated May 12, 2009, http://www.smartmoney.com/spending/rip-offs/10-things-your-bank-wont-tell-you-23457/?print=1.
(Read No. 4.College campuses are a gold mine for us (The Banks) pretty much says it all.
"Students are the customers of the future, and banks are increasingly courting them, sometimes right on campus. More than 120 universities have cut deals with banks to issue student-ID cards that are also ATM and check cards. Schools can make millions from these deals, sometimes even taking a small cut of individual purchases."
“Students are also a hot market for credit card issuers; banks will make private deals with alumni associations to get contact info for students, parents, and ticket buyers to university athletic events. Card companies cut deals to set up booths on campus, and Chase even inked a deal with Facebook to display ads and set up a Chase group on its website (Source:Smart Money Magazine, See link above)”. Before the ink was even dry on President Obama's signature regarding the "Credit Card Reform Act of 2009", all the CEO's at Citigroup, Wells Fargo, and U.S. Bank were licking their chops at the gift the credit card industry gave them. In case you forgot, America's colleges and universities were previously courted by the credit card companies. In 2007, credit card companies gave somewhere between $800 million to $1 Billion dollars to these school for allowing them to peddle their goods and services. Now the banks are doing it. Only this time, it could be financial nighmare for college students. With credit cards, they have a limit. Once the limit ($500) is reached (plus 5% of credit limit) ($525), the card is denied. However, a debit card has no limit per se (except banks have a formula that allows you to overdraw your account by a certain amount), so if you do not manage your account very carefully, you could be hit with what the banks call a courtesey overdraft. That courtesey overdraft can cost you $35 per item. Or, you can have overdraft protection with a savings account and then if you overdraft your account, the bank will charge you a $5 to $10 transfer fee to move money from your savings account to your debit card account. Either way, you can lose big time if you are not well versed in money managment skills. By the way, "Money Management Courses" in America's high schools are not a required course for graduation in most states. It is an elective course (not mandatory). What makes this even more troubling for our college students is the security issues concerning this new "Student ID/Debit Card". Cyber security professionals are greatly concerned that it could create an explosion of hacking attacks on America's college and university campuses because banking account information has now been added to the "Personal Identifying Information" (P.I.I.) of each student on campus.. Remember the security breaches at the University of Texas, Austin, Univ. of Texas, Arlington and North Texas University, Denton, Tx. several years ago. The combined number of records that were breached at all three schools was approximately 100,000 current and former students.
Remember, when you have security breaches, an increase in "Identity Theft" cases usually follow within thirty to sixty days (depends on what data was stolen). The only advice I can give to parents and students at this time is, make sure you have an opt-out on the debit card provision the school is using and just get a student ID card. If you children are not well versed in "Money Management" procedures (how to balance a check book, etc.), then I would suggest strongly they take a course this summer at a community college in their home town. Ignoring these two major financial events involving credit cards and the new "Student ID/Debit Card combination could be disasterous for both parents and students.
Parents and grandparents must find other avenues, beside credit cards, to get our children and grandchildren educated in the 21st Century.We are concerned about the safety and also the increased threat of “Identity Theft” with this new “Student ID/Debit Card”. For this coming school year of 2009/2010, parents and college students alike will have to suck it up and be innovative for the next three to twelve months to cover this void in their financial planning for college. Unfortunately, some students will either have to delay their college plans or they will have to go part-time. Others may have to choose local community colleges instead of the major colleges or univerisites. You ask, what is different? The largest major credit card reform in history has just occurred. According to Consumer Union, "Experts predict this law will transform the credit card industry, which has been largely unregulated since the late 1970's (Source: Consumer Union). Here is the some of the provisions of this new law: ·Puts most reforms in place earlier, by February 2010 rather than the original July 2010 implementation date ·Prohibits interest rate hikes during the first year of your contract, and restricts rate hikes on purchases you already made ·Any payment you make above the minimum goes to balances with the highest interest first -- helping to more quickly pay down debt ·Gives you 45-day notice for rate increases on future purchases. If your rate increases, ensures that you have adequate time to pay off the balance at the old rate ·Low teaser rates have to remain the same for six months ·Limits fees and penalty interest ·Gift cards can’t expire for the first five years ·Restricts aggressive marketing of credit to college students (Go to this link to see how credit cards have been solicited at colleges in the past: http://www.creditcardreform.org/factsheet-credit_card_debt.html ·Prohibits the three national credit bureaus from releasing or selling credit file information on any consumer under the age of 21 years old to any creditor. Consumers who are at least 18 years old and less than 21 years old must opt-in for this service. This action must be initiated by the consumer. It cannot be initiated by a creditor seeking to open an account on an underage consumer. ·Verification of their ability to pay - must be based upon their current and expected income, current obligations and employment status (cannot use value of student loan to issue credit cards). As a college student, you are probably asking how this will affect me directly. Simply put, if your are between the ages of 18 and less than 21, you cannot get a credit card, car loan or any other form of credit while attending college full time under your name only, unless your parents/legal gaurdian, grandparents or a friend co-signs the loan papers or credit applications as one of the responsible parties(Verification of your ability to pay provision). But there are exceptions. If you are a self-made millionaire (i.e., Miley Cyrus) or your parents are in the top ten percent income brackets nationwide (if they didn't lose their shirts in the Wall Street Meltdown in 2008) then you probably already have enough cash, a car, and plenty of credit cards to carry you through the next four years of college (less than 5% of college students are in this category). However, the majority of college students have student loans, scholarships (Full & Partial), parents or grandparents, and/or they work to pay their tuition, books, and living expenses for college.
So the days of using a credit card to cover expense like food, school supplies, laundry or dry cleaning may be over for many. I know most students used their credit cards and then covered the bills with their part-time work every month without their parents knowing about their credit card debt. Again, with the economy and job losses, part-time jobs this year could be scarce at most colleges and universities. What does this mean? The three provisions highlighted in red will directly affect all college students under the age of twenty-one (21 years old). The "Credit Card Reform Act of 2009" (signed by President Obama, 5/22/09) is the first major revision for credit card companies in the last thirty (30) years. However, most of these provisions will not be effective until February 2010. Regardless of what the credit card companies have said about drastically curtailing solicitations due to the economic meltdown, do not be surprised when your college-bound children are flooded with solicitations between now and February 2010, before the law changes. We all know what the credit card companies did when the Federal Reserve announced similar changes that were supposed to go in effect July 2010. The credit card industry jacked our standard interest rates between five (5%) and ten (10%) percent or more. They jacked our default rates to loan shark rates (33.0% on some cards). If this wasn't enough, they slashed our available credit limits to where millions of Americans credit scores were dropped 50 to 100 points because our credit balances exceeded twenty or twenty-five (20.0% or 25.0%) of our credit line. Don't get me wrong. This new law is the best thing for all Americans in the short and long term. The real benefactors of this law will be the millions of college students between the ages of eighteen and twenty-three. They will not be saddled with both student loans and large credit card debt when they graduate. They may not like it, but they will learn to accept it. The big loser in all of this was the credit card companies. Why? They failed to govern themselves. They put their interest and greed over the financial security of the American consumer. The CEO's of these companies are kicking themselves in the rear. They killed the goose that laid the golden egg (the next generation of consumers). They did what parents couldn't do. They took away credit cards to fifteen (15) million college students. I know we are all suffering through bad economic times right now with lost jobs, foreclosed homes, and having our 401K's turning into a 201K. But, as a nation, we must all pull in the same direction. So if you are an employer, do what you can to hire college students this summer. Who knows, one of the students you help now, might be your future employer. One final note regarding "Identity Theft In America". We cannot stop "Identity Theft", but we can make it extremely difficult for "Identity Thieves" to use your stolen financial instruments (checking account, credit and debit cards). We have developed two financial tools that will allow you to take control of your financial security quickly if and when "Identity Theft" strikes you and your family.
These products are an integral part of protecting you and you family from suffering the severe financial and emotional damage that "ID Thieves" commits on its "Victims".
Warm Regards and God Bless America and God Bless Our College Students. Lawrence (Larry) E. Wilson Founder and Director Identity Theft Victims Support Group of North America Identity Theft Victims Support Group of North Texas Identity Theft Victims U.S. www.identitytheftvictims.us Phone:214-412-5970
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