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Buono Bill To Reform On-Campus Credit Card Solicitations Advances

TRENTON – A bill sponsored by Senator Barbara Buono which would make various changes to regulate the solicitation of credit cards on college campuses – including requiring creditors to provide an educational program on the responsible use of credit and prohibiting credit card companies from using promotional gimmicks as an incentive for students to sign up – was approved by the Senate Commerce Committee today by a vote of 4-0.

“Too many students on college campuses across the country are accumulating dangerous levels of credit card debt,” said Senator Buono, D-Middlesex, and Chairwoman of the Senate Budget and Appropriations Committee. “We need to be proactive in preparing our college students for the responsibility of personal credit, and this bill will go a long way to ensuring that kids being solicited on campus in New Jersey will be better credit consumers.”

The bill, S-1927, would require that credit card issuers annually register with an institution of higher education before soliciting students on-campus with credit card offers. The issuer would be required to provide to students an educational program on responsible credit card use, which would include:

• A full explanation of the consequences of not paying off credit card balances in full within the time specified on the billing statement, including an explanation of how interest is computed on unpaid balances;

• A full explanation of the differences between an introductory interest rate and an ongoing interest rate, including the exact time when the higher ongoing interest rate takes effect;

• An explanation on how long it would take to pay off certain hypothetical balances by only paying the minimum monthly payment;

• An explanation on credit-related terms;

• And a discussion on the generally-accepted prudent uses of credit and the consequences of imprudent credit card use.

In addition, the bill would prohibit credit card solicitors from issuing a credit card to a student without a certificate that the student completed the credit education course. And finally, the bill would prohibit solicitors from purchasing or otherwise obtaining the names and addresses of enrolled students from the institution of higher education, or offering gifts or other promotional incentives to students in order to entice them to apply for a credit card.

“The free water bottle or T-shirt being offered at a table in the Student Center is going to come as very little consolation when you’re staring down a credit card bill in the thousands,” said Senator Buono. “Promotional sales gimmicks and students’ own ignorance about the factors playing into their personal credit and credit card debt result in many young adults getting in way over their heads. By informing them of the facts and eliminating sales gimmicks, we can hopefully empower students to make better credit decisions.”

According to a 2007 CBS News report, almost one-third of high school seniors and more than three quarters of college freshmen have already accumulated credit card debt. The Center for the New American Dream found that over half of all college students carry four or more credit cards by the time they leave school. Senator Buono noted that this trend is likely to increase, particularly as the current economic conditions make it harder for students to receive loans or other financial assistance to help pay for college.

“We need to give kids the facts, before they exacerbate their own personal financial dilemmas. We can no longer encourage ‘buy now, pay later’ finances, and must seek a better model, to insulate future generations from the mistakes which have played a big part in our current economic downturn,” said Senator Buono.

The bill now heads to the full Senate for consideration.

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