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The Credit Card Accountability, Responsibility and Disclosure Act is about to give millions of college students greater difficulty securing credit cards. A part of the law that goes into effect in February requires anyone younger than 21 to have either a legal adult co-sign a credit card application or prove they can handle the debt themselves. This requirement should give issuers an opportunity to make prepaid cards an attractive alternative, observers say. "College students now have more of a need for prepaid cards than ever before," Jerry Welch, CEO of prepaid card provider nFinanSe Inc., tells ATM&Debit News. In August, the Network Branded Prepaid Card Association, a nonprofit industry trade association, published guidelines for college students and their parents that choose a network-branded reloadable prepaid card. The guidelines advise students and their parents to understand the terms and conditions of prepaid cards, become familiar with the security and loss-prevention features of a card, and track loading and spending regularly. Card providers, however, may have difficulty taking advantage of this opportunity without better consumer education about prepaid cards, says Kirsten Trusko, Network Branded Prepaid Card Association president and executive director. "One of the challenges is helping people understand what [prepaid cards are]," she says. The association helps to do this by creating educational materials around prepaid cards to support nonprofit organizations serving underbanked consumers. Earlier in August, for example, consumer-advocacy group Consumers Union released a report criticizing the multiple fees associated with prepaid cards. John Ulzheimer, president of consumer education at San Francisco-based consumer-education Web site credit.com, believes credit card issuers' marketing departments will develop new products by the end of the year. "We may start to see cards marketed as a 'family' credit card," he says. The reason for such a move is to help credit card issuers retain customers ages 18 to 21, Ulzheimer says.
