The Card Act of 2009 put an end to a college parent’s nightmare: college students who activated credit cards with little chance of repayment, backed by parents who understand that poor credit bureau scores can undo four years of study. Transactions went beyond books into the usual college diet of pizza and beer.
In the sixth report to Congress on student credit cards, CFPB presents interesting factoids:
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Bank of America, via its subsidiary FIA Card Services, remains the largest player in this market. By examining solely the number of agreements by issuer, Bank of America’s presence is relatively stable, representing 81 of 225 agreements, 36% as compared to 34% in 2015.
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Bank of America represented 78% of all accounts open under such agreements and 70% of payments made to institutions and their affiliates under such agreements. The nearest competitors by those metrics have a 4% and 8% market share, respectively.
In total of year-end open accounts, BoA had 574,050 college accounts, of which 27,222 were newly booked, versus the national total of 741,475 total accounts, with 57,786 booked.
BoA has a home court advantage because of its acquisition of MBNA a decade ago. Alumni associations have more than 40% of total college accounts, albeit graduates rather than undergrads.
This is an important segment for issuers particularly as issuers contend for millennials. The Card Act probably curtailed some of the pizza and beer transaction volume, but you can expect no-one in Alabama was empty-handed during overtime!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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