With spring break imminent, most college students would like to have a credit card in their wallets for their mini-vacation. But things have changed due to the implementation of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009.

One of the provisions – to help those under 21 avoid credit card debt – requires them to have independent means to repay credit card debt or to have a co-signer over age 21.

As a college faculty member, I’ve seen many naive students sell their creditworthy souls for free gewgaws. I consider it wonderful that the CARD Act now prohibits card issuers from distributing Frisbees, gift cards, compact discs and T-shirts as inducements to apply for student credit cards. (Universities must also disclose marketing agreements with credit card issuers, including posting information about these agreements on their websites.)

If you do have an opportunity to apply for a credit card under the new rules, though, you still need to shop wisely. And the major credit card issuers have adapted to the CARD Act with various programs that encourage good financial habits.

Rules for shopping

When shopping for a first credit card, college students everywhere should expect two things:

1. Credit card rates. Expect higher interest rates for a student card. You’re simply more of a risk until you’ve proven your creditworthiness. You’ll save yourself a lot of money by paying the card in full each month – meaning you won’t be paying interest on purchases you made–and you’ll be developing good habits to boot. Of course, monthly payment in full may not be realistic when repaying spring-break expenses.

2. Lines of credit. Your credit limit, or line of credit, is usually set low, between $300 and $3,000. This can prevent financial disaster. It helps you learn to manage credit when the amount that has been extended is still reasonably low.

AmEx’s approach to student credit

American Express does not market to college students, according to Vice President of Public Affairs and Communications Desiree Fish. Its focus is on marketing to parents of students by notifying parents that they have the option to add their young adult as an additional member on their account.

American Express has a feature called Custom Limits, which allows parents to give children 15 years and older limits that can be changed at any time. Another American Express product, called PASS, is a prepaid, re-loadable card parents can give teens and young adults.

Jean Chatzky, author of “Not Your Parents’ Money Book,” has teamed with American Express to encourage families to sit down and talk about money and financial responsibility. Titled “The National Money Night Talk,” they’ve produced a free online resource available in three tracks based on age–middle school, high school and college.

Bank of America’s student offerings

Bank of America qualifies students on their ability to pay, debt ratio and the line of credit assigned to the account. BOA offers a young-adult credit education program, including a student financial handbook and a brochure about building good credit. BOA also co-sponsors with Monster Worldwide the Ultimate Money Skills (UMS) program. In addition to a website, UMS provides free money management presentations on high school and college campuses.

Capital One’s educational journey

Capital One looks only for a means to pay based on reported income, and it does not currently offer co-signed cards. “We set low initial credit limits for young adults to familiarize them with how credit works,” says Capital One Communications Director Pam Girardo.

Capital One has also partnered with the group Consumer Action to produce MoneyWi$e, a web-based training module designed for consumers new to credit. MoneyWi$e is billed as the first multilingual financial education program to combine training, teaching aids, regional meetings and roundtables.

Capital One has also introduced a new card, the Journey Student Rewards from Capital One credit card, which is billed as a new, holistic approach designed to help college students manage credit responsibly and build a good credit score. The cards have low initial limits, and offer such features as text and e-mail payment reminders to help train new cardholders. Rewards in the form of a 25 percent cash-back bonus on the cash back you earn each month are offered for good credit behavior–when you pay your bill on time.

Capital One spokeswoman Sukhi Sahni says, “Capital One has never marketed on college campuses.”

Still aiming for new customers

Chase is not focused on college students as credit card customers, according to spokeswoman Gail Hurdis, but they do have a Student Center section of their website, which includes credit card offers, information on student loans and resources for parents.

Citi rolled out its Citi Forward Card for College Students credit card several years ago, and it also has credit education features. When using credit wisely this card offers up to 2 percent purchase APR reduction when you make a purchase, stay below your credit limit and pay on time 3 billing periods in a row (0.25% each quarter 8X maximum). And rewards customers with up to 1,200 points per year for paying on time and staying under their credit line. “Citi remains committed to young adults to provide resources they need to spend wisely,” says Citi spokesman Samuel Wang.

Discover offers a student credit card that includes a cash back rewards program, a low introductory rate and no annual fee.

Pentagon Federal Credit Union (PenFed) offers a Student Visa Classic Card to students enrolled in ROTC, at West Point, the Air Force Academy and the Coast Guard Academy. “The limit on these cards is determined by the cadet’s year in school,” says PenFed spokeswoman Amy Doane. “The minimum credit line is $500 and the maximum line for a fourth-year cadet is $3,000.”

The CARD Act has tempered marketing credit cards to college students, and issuers have devised a variety of inspired options with new and improved terms. Hopefully you’ll have just the right card in time to enjoy your future as you learn to manage your transactions wisely.

Published 03/08/11 (Modified 11/21/13)