Credit Card Companies Paid $83 Million to Colleges and Alumni Groups in 2009
The CARD Act requires credit card companies to disclose the details on how much they pay to colleges for the rights to market their cards to students and alumni. The Federal Reserve’s first Report on College Credit Card Agreements was released Monday, showing that credit card issuers paid over $83 million to colleges and their related alumni organizations in 2009.
Issuers paid out $83,462,712 to a total of 1,044 colleges and associations, an average of nearly $80,000 per institution. A total of 53,164 new college credit card accounts were opened under these agreements in 2009. The report details the payments to each school.
The University of Illinois Alumni Association received the highest payment of $3,272,657 in 2009. The Penn State Alumni Association received $2,835,000. Both of these payments came from Bank of America. The University of Notre Dame got $1,860,000 from Chase in 2009.
While 17 issuers struck marketing deals with colleges, three credit card companies–Bank of America, Chase, and U.S. Bank–accounted for approximately 96 percent of all college credit card agreements submitted to the Board. Bank of America alone had marketing deals with 86 percent of the institutions.
Bank of America submitted 906 college credit card agreements, more than fifteen times as many as any other card issuer. In 2009, it made payments totaling $61,968,307, an average of $68,398 per agreement. It opened 38,610 new accounts under its college affinity program.
U.S. Bank submitted 60 agreements and spent a total of $2,502,744 ($41,712 average). It opened up 7,911 new accounts in 2009.
Chase Bank submitted 36 agreements and paid out $13,892,863, a staggering average of $385,912 per agreement last year. It opened 529 new accounts under these agreements.
Issuers are willing to pay these figures in return for valuable information from colleges and alumni associations, which could include phone numbers, e-mail addresses and physical addresses of members. The agreement usually comes with a right to market cards to them a specified number of times.
Under the CARD Act, credit card issuers can no longer offer incentives or giveaways to encourage card applications on college campuses. It also prevents anyone younger than 21 from getting a credit card without proof of ability to pay or an adult co-signer.