Federal Reserve Board of Governors Report to the Congress on College Credit Card Agreements
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October 2010 Federal Reserve Board of Governors Report to the Congress on College Credit Card Agreements Board of Governors of the Federal Reserve System i Table of Contents PURPOSE 1 SUBMISSION OF COLLEGE CREDIT CARD AGREEMENTS TO THE BOARD 1 OVERVIEW OF COLLEGE CREDIT CARD AGREEMENTS 1 Credit Card Issuers 2 Institutions of Higher Education, Affiliated Organizations, and Other Organizations 3 Number of Open College Credit Card Accounts 3 Payments by Credit Card Issuers 4 Number of New Accounts 4 DETAILED INFORMATION ABOUT AGREEMENTS SUBMITTED TO THE BOARD 5 APPENDIX 6 College Credit Card Agreements Submitted to the Board for 2009 6 1 Report on College Credit Card Agreements PURPOSE with an institution of higher education (“affiliated organizations”)1 that was in effect at any time during The Board of Governors of the Federal Reserve Sys- the preceding calendar year. Issuers also are required to tem (the “Board”) submits this report in accordance submit the following information with respect to each with Section 305 of the Credit Card Accountability agreement: (1) the amount of payments made by the Responsibility and Disclosure Act of 2009 (the “Credit issuer to the institution or affiliated organization dur- CARD Act”), Pub. L. No. 111–24, 123 Stat. 1734 ing the year;2 (2) the number of new credit card (2009). Section 305(a) of the Credit CARD Act requires accounts opened pursuant to the agreement (“college the Board to submit to the Congress, and to make avail- credit card accounts”) during the year; and (3) the num- able to the public, an annual report that lists certain ber of open college credit card accounts at year-end information submitted to the Board concerning agree- (regardless of when the account was opened). ments between credit card issuers and institutions of Issuers were required to make their initial submission higher education (“institutions”) or certain affiliated to the Board by February 22, 2010. This initial submis- organizations, such as alumni associations or founda- sion comprised college credit card agreements to which tions, that provide for the issuance of credit cards to the issuer was a party during 2009 and information regard- college students (“college credit card agreements” or ing payments and accounts as of December 31, 2009. “agreements”). Pursuant to Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, respon- OVERVIEW OF COLLEGE sibility for collecting and submitting to the Congress CREDIT CARD AGREEMENTS annual reports regarding college credit card agreements will transfer to the newly-established Bureau of Con- The Board received a total of 1,044 college credit card sumer Financial Protection on the designated transfer agreements from seventeen credit card issuers. In 2009, date, July 21, 2011. these issuers made total payments of $83,462,712 to Information included in this report is also available institutions and organizations pursuant to these agree- on the Board’s public website at www.federalreserve.gov ments. The total number of new college credit card /collegecreditcardagreements. In addition, under Sec- accounts opened pursuant to these agreements during tion 304 of the Credit CARD Act and the Board’s 2009 was 53,164. The total number of college credit implementing regulations, 12 C.F.R. § 226.57(b), the card accounts opened pursuant to these agreements public can obtain college credit card agreements during or prior to 2009 that remained open as of between a card issuer and an institution of higher edu- December 31, 2009, was 2,008,714. As discussed below, cation directly from the institution. additional information regarding payments and accounts is provided in the Appendix to this report. This report is based on information and agreements SUBMISSION OF COLLEGE CREDIT CARD submitted to the Board by card issuers. Because some AGREEMENTS TO THE BOARD agreements address the provision of both credit cards Section 305 of the Credit CARD Act and the Board’s 1. In some cases, issuers submitted to the Board agreements implementing regulations, 12 C.F.R. § 226.57(d), reached with other types of organizations, such as fraternities, sorori- require credit card issuers to submit to the Board each ties, and professional or trade organizations, that relate to the issuance year a copy of any college credit card agreement of credit cards to college students. Such agreements are included in this report and categorized as agreements with “other organizations.” between the issuer and an institution of higher educa- 2. All payment amounts presented in this report, including in the tion or an alumni organization or foundation affiliated Appendix, are rounded to the nearest dollar. 2 Report on College Credit Card Agreements □ October 2010 and of other financial products (such as deposit (“FIA”), which is a subsidiary of Bank of America Cor- accounts), payments made by issuers under these agree- poration, submitted 906 college credit card agreements, ments may not be based solely on credit card accounts. more than fifteen times as many as any other card In addition, some or all of the accounts opened pursu- issuer. In 2009, FIA made payments totaling ant to these agreements may have been opened by indi- $61,968,307 to institutions of higher education, affili- viduals who are not students (such as alumni, faculty, ated organizations, and other organizations, and and staff of an institution of higher education). Fur- opened 38,610 new accounts under its college credit thermore, card issuers’ submissions do not include card agreements. As of December 31, 2009, FIA had a information regarding credit card accounts opened by total of 1,605,969 open college credit card accounts students independent of these agreements (such as pursuant to these agreements. when a student responds to an offer made to the gen- U.S. Bank National Association ND (“U.S. Bank”) eral public). submitted 60 agreements, the second largest number of The Board also notes that, because issuers were agreements submitted by a single issuer. Under these required to submit all college credit card agreements to agreements, U.S. Bank made total payments of which they were a party at any time during 2009, issu- $2,502,744 to institutions of higher education, affili- ers’ submissions may include agreements that termi- ated organizations, and other organizations, and nated in 2009 or 2010, and therefore are no longer in opened 7,911 new accounts in 2009. U.S. Bank had a effect. The terms of some agreements may have been total of 122,163 open college credit card accounts pur- amended during 2010 as a result of new requirements suant to these agreements as of December 31, 2009. imposed under the Credit CARD Act and the Board’s Chase Bank USA, N.A. (“Chase”) submitted 36 implementing regulations. Those revised agreements are agreements. During 2009, Chase made total payments not reflected in this report, but will be included in issu- of $13,892,863 to institutions of higher education, ers’ March 31, 2011, submissions to the Board. The affiliated organizations, and other organizations, and next report submitted to the Congress will include those opened 529 new accounts under these agreements. As revised agreements. of December 31, 2009, Chase had a total of 217,917 open college credit card accounts pursuant to these Credit Card Issuers agreements. Three credit card issuers accounted for approximately 96 percent of all college credit card agreements submit- ted to the Board in 2010. FIA Card Services, N.A. Table 1. Credit Card Issuers by Number of Agreements Submitted Number Payments Accounts Total open Credit card issuer of agreements by issuer opened accounts submitted in 2009 in 2009 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 Credit Union 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 Credit Union 1 $ 3,372 534 2,408 Michigan State University Federal Credit Union 1 $ 60,000 76 275 USAA Savings Bank 1 $ 84,530 539 539 Total 1,044 $83,462,712 53,164 2,008,714 Board of Governors of the Federal Reserve System 3 Table 2. Type of Institution or Organization by Number of College Credit Card Agreements Submitted Number Payments Accounts Total open Type of institution or organization of agreements by issuer opened accounts submitted in 2009 in 2009 as of 12/31/2009 Institutions of higher education 413 $22,369,079 12,513 432,020 Alumni associations 348 $43,907,067 25,919 1,015,242 Foundations 84 $ 5,391,527 4,017 134,807 Other organizations 180 $ 5,815,074 7,399 295,306 Multiple institutions and organizations 19 $ 5,979,965 3,316 131,339 Total 1,044 $83,462,712 53,164 2,008,714 Table 3. Ten Largest Agreements by Total Number of Open Accounts as of December 31, 2009 Agreement Total open Accounts Payments accounts opened by issuer Institution or organization Credit card issuer as of 12/31/2009 in 2009 in 2009 The Penn State Alumni Association FIA Card Services, N.A.