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

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

Credit Card Issuer

Number
of agreements
submitted

Payments
by issuer
in 2009

Accounts
opened
in 2009

Total open
accounts
as of 12/31/2009

FIA Card Services, N.A. 906 $61,968,307 38,610 1,605,969
U.S. Bank National Association ND 60 $2,502,744 7,911 122,163
Chase Bank USA, N.A. 36 $13,892,863 529 217,917
Pennsylvania State Employees C.U. 13 $7,375 1,475 1,849
INTRUST Bank, N.A. 8 $1,781,180 1,313 37,596
UMB Bank, N.A. 6 $3,734 31 232
GE Money Bank 3 $1,725,816 77 1,484
First National Bank of Omaha 2 $17,788 1 1,062
PNC Bank, N.A. 2 $200,000 322 2,596
Banco Popular de Puerto Rico 1 $58,674 419 8,477
Barclays Bank Delaware 1 $1,000,000 1,326 5,771
Capital One Bank (USA), N.A. 1 $0 0 0
Commerce Bank, N.A. 1 $6,329 1 376
Compass Bank 1 $150,000 0 0
Elevations CU 1 $3,372 534 2,408
Michigan State University FCU

1

$60,000

76

275

USAA Savings Bank

1

$84,530

539

539

Total

1,044

$83,462,712

53,164

2,008,714

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

Agreement

Total open
accounts
as of 12/31/2009

Accounts
opened
in 2009

Payments
by issuer in 2009

Institution or organization

Credit card issuer

The Penn State Alumni Association FIA Card Services, N.A. 74,832 1,569 $2,835,000
Golden Key International Honour Society FIA Card Services, N.A. 38,692 399 $1,540,442
Alumni Association of the University of Michigan and the
Regents of the University of Michigan
FIA Card Services, N.A. 38,358 947 $1,500,000
The Association of Former Students of Texas A&M University FIA Card Services, N.A. 36,731 475 $1,157,434
The Ex-Students Association of the University of Texas FIA Card Services, N.A. 33,812 616 $182,029
Indiana University Alumni Association FIA Card Services, N.A. 29,903 355 $1,131,221
UCLA Alumni Association FIA Card Services, N.A. 28,317 624 $980,474
University of Notre Dame du Lac Chase Bank USA, N.A. 27,574 77 $1,860,000
University of Illinois Alumni Association FIA Card Services, N.A. 25,528 330 $3,272,457
Heritage Affinity Enterprises, LLC U.S. Bank National Association ND 23,741 536 $40,942
Total 357,488 5,928 $14,499,999

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.

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