Do Credit Card Marketing Restrictions Affect Financial Well-Being?

In the late 1990s, growing concerns about credit card debt among college students fuelled extensive debates about whether credit card marketing to college students should be regulated. While some argued early access to credit cards was beneficial for students, others argued students needed protection from what were seen as predatory marketing strategies. Despite the number of regulations that were ultimately passed, and the lack of agreement that continues to exist, the effect of regulations has been the subject of little economic analysis. This paper fills this gap by examining the effects of some of the most common regulations: (1) a ban on the use of gifts in exchange for a completed credit card application, (2) restrictions on the time and place of marketing activities, (3) a ban on the sale of student information for marketing purposes, and (4) mandating that students be provided with financial information and/or training prior to solicitation. Using Survey of Income and Program Participation (SIPP) data on the balance sheets of 22- through 26-year olds, and exploiting cross-state variation in the passage of marketing regulation over time, I examine whether regulations had an effect on the financial well-being of individuals who were exposed to these while in college. I also examine whether regulations had a differential effect on low net worth individuals, one group of at-risk consumers whom marketing regulations were meant to protect. I find weak evidence that credit card marketing restrictions had any significant on financial well-being, including among low net worth individuals.

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