The Credit CARD Act, a piece of federal legislation reforming credit card laws and limiting some of the credit card industry’s most profitable and punitive practices, took effect yesterday after being signed into law in May.

The law bans companies from issuing credit cards to anyone under 21 unless they have an adult co-signer or can demonstrate the ability to repay the debt through a financial background check.

While some have praised the legislation as protecting college students from being targeted by the credit card industry, others have decried the restrictions it places on students’ and teenagers’ abilities to apply for credit cards.

President Barack Obama said in a statement released yesterday that the law will make the process of applying for a credit card more transparent.

“These new rules don’t absolve consumers of their obligation to pay their bills, but they finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions,” Obama said in the statement.

Though the legislation could have far reaching implications for the way credit card companies advertise to students, Jerry Sigler, senior vice president and chief financial officer of the University’s Alumni Association, said the new laws will not significantly affect the University’s contract with Bank of America.

The Daily reported in February 2009 that, under the contract, the Alumni Association provides Bank of America with student and alumni information in exchange for revenue based on the number of accounts opened with that information.

According to Sigler, the program mostly targets alumni, which is why it won’t be significantly affected by the legislation.

“If you look at the way we’re compensated, the number of accounts that are opened, the royalties that are generated, the legislation doesn’t really affect the program,” he said.

The Alumni Association has partnered with Bank of America since 1991, according to Sigler. Currently, the two entities have a 10-year, $25 million contract that began in 2004, according to the contract between the partners.

According to Sigler, there are approximately 75,000 accounts open under the contract, 400 of which belong to students.

Betty Riess, senior vice president in corporate communications of Bank of America, said student accounts generate roughly two percent of the revenue derived from the program and that Bank of America and the Alumni Association have not marketed on campus in roughly two years.

“We’ve been in compliance with the laws for a while,” she said. “Our program has always been targeted at non-students, and this just focuses that a little more.”

The law, which was widely supported in Congress but opposed by many banks, will also make it mandatory for companies to notify account holders of rising interest rates and spending limits at least 45 days in advance.

It will also allow cardholders to pay off their highest debts first, which could be especially helpful to college students, according to Christine Lindstrom, director of the Education Project on Debt conducted by the United States Public Interest Research Groups.

Lindstrom said the legislation could be "huge and very significant" for decreasing debt.

“By giving the cardholder some ability to proactively fix the problems that they had, to get out from underneath the penalty interest rate, you can lower the debt that that person would otherwise face,” Lindstrum said in an interview with the Daily in September.

Though he said the Alumni Association’s relationship with the bank doesn’t stand to suffer from the new laws, Sigler said he thinks the legislation should have focused more on educating young consumers than sheltering them.

“Having a credit card is as much a part of the educational experience, the maturation process of going to college and being independent as anything else,” he said.