Bank of America Pays $62M to Market Credit Cards to Students

Bank of America is marketing credit cards to college students much more vigorously than its competitors, according to a new report from the Federal Reserve. The recently passed CARD Act requires credit card companies to submit to the Fed all college credit card agreements to which they are a party.

Here are some of the report’s key findings for 2009:

• The Fed received a total of 1,044 college credit card agreements from seventeen credit card issuers.
• Issuers paid a total of $83,462,712 to colleges and other organizations pursuant to these agreements.
• The total number of new college credit card accounts opened pursuant to these agreements was 53,164.
• The total number of college credit card accounts opened pursuant to these agreements during or prior to 2009 that remained open as of December 31, 2009, was 2,008,714.

The report shows that in 2009 BofA’s subsidiary FIA Card Services has submitted 906 college credit card agreements to the Federal Reserve Board of Governors, more than fifteen times as many as any other issuer. Moreover, FIA paid a total of $61,968,307 to various organizations according to these agreements. This is 74 percent of the total amount paid by issuers in 2009. Chase, which came in second in the amount spent column, lagged far behind with 36 agreements and $13,892,863 paid. Following is the full list:

Credit Card Issuers by Number of Agreements Submitted

Source: The Federal Reserve

The report shows that the University of Illinois Alumni Association was the biggest recipient of the issuers’ money. It received $3,272,457 from FIA. Following is the full list.

Ten Largest Agreements by Total Number of Open Accounts as of December 31, 2009

Source: The Federal Reserve

The CARD Act bans issuers from opening credit card accounts for consumers under 21 years of age, unless the applicant can prove that he or she can repay the debt or a co-signer guarantees the account. Moreover, credit card companies can no longer hawk their products within 1,000 feet of college campuses. Still, it is evident that issuers are far from discouraged and are willing to spend big to get access to college students.

Image credit: Wikimedia Commons.