Credit card companies are finding ways around new regulations that restrict how they can market their cards to college students.
A number of lenders are partnering with colleges to offer prepaid cards that function as student IDs, according to the Wall Street Journal.
These student IDs grant students access to campus buildings and let them check out library books, have campus meals, pay for laundry and go to the gym. Since the cards are offered by prominent lenders, they can be used to pay for products at retailers that accept those cards.
North Carolina State University announced on Wednesday that it is partnering with U.S. Bank to give the Wolfpack One Card to incoming freshmen this fall. Current students, faculty and staff can pay $10 to get the new card.
Unlike most prepaid cards, the Wolfpack One Card has no monthly fees, no fees for point-of-sale purchases, no fees for withdrawals at U.S. Bank ATMs, no enrollment fees for new students, and no minimum balance to keep the account active, according to the press release and the WSJ.
Since the Wolfpack One Card is backed by MasterCard, it can be used to pay for products and services "worldwide," according to Dan Adams, associate vice chancellor at North Carolina State University. It also can be used for direct deposit from employers.
Credit card companies were pushed off college campuses in 2009 as a result of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act), which limited lenders' ability to market and distribute credit cards on college campuses and at school events. Partnerships with schools serve as an invitation to banks to once again tap into the profitable student market.
Many colleges already offer student IDs that can be used at retailers near campus. Harvard students are automatically enrolled in the university's Crimson Cash program through their student IDs, which they can use at a number of nearby stores and restaurants. Crimson Cash partners with American Express, MasterCard and Visa, according to its website.
Prepaid cards are becoming more popular as traditional bank accounts remain out of reach for many people, despite their notorious fees. 13 percent of all Americans used prepaid cards in 2011: up from 11 percent in 2010, according to a recent study by Javelin Strategy & Research, a market research group. More Americans are adopting prepaid cards in order to avoid hidden bank fees, according to a recent Pew study.
More Americans also are relying less on cash. 43 percent of Americans have gone a week without using cash, according to a recent Rasmussen survey.