Notre Dame Debit Card Shows Banks Still Pay to Push Fee Products

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The University of Notre Dame Thursday announced a new official banking partner of the school’s athletic department, Credit Union 1, an Illinois financial institution.

The deal provides access to school- and mascot-branded debit cards, as well as other banking services, including a plan to sell prepaid debit cards at Notre Dame Stadium, as part of the school’s push to go cashless at football games this fall. Fans get perks like a free year of Amazon Prime membership and some fees waived on mortgages. While once commonplace at schools across the nation, deals like this are increasingly rare, showing that in finance as in football, Notre Dame remains a coveted brand.

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Financial details of the arrangement between the school and credit union aren’t disclosed and likely never will be—Credit Union 1 is an Illinois-regulated financial institution, and the state doesn’t appear to require marketing agreement disclosures. Regulators didn’t immediately respond to a request for more information.

However, a similar arrangement with Bank of America for banking services that ran through 2019 shows the Irish likely will collect a decent fee for every student and fan who signs up. Under the Bank of America deal, disclosed to the Consumer Financial Protection Bureau, Notre Dame collected $100 for every new sign-up for a credit card or rewards account (which were fee-generating checking accounts). On top of that, the school collected a portion of all the money Irish account holders generated—half-a-percent of charges on the credit card, 0.05% to 0.2% on debit spending, depending on the specifics of the account. Plain vanilla deposit accounts, the least profitable account for a typical bank, still generated a $10 sign-up fee for the school, plus $2 annually for every account that had a balance of $50 or more. In the past 10 years according to CFPB data, Notre Dame collected $4.7 million from the arrangement, while Bank of America gained 5,552 active accounts.

Deals like these used to be much more popular. In 2009, at the peak of college affinity cards, there were 1,045 flavors of cards that paid schools and their athletic departments $84.5 million that year, according to CFPB data. Banks loved them as a way to reel in younger consumers who needed both access to credit and were much more likely to pile up late fees and interest charges. Schools loved them as an easy source of revenue that often required little to no effort. The University of Illinois Alumni Association made the most in 2009, $3.3 million, from more than 25,000 accounts with banks.

Affinity cards, though, started dying out, in part because banks overpaid for access to some high-profile schools—Duke and Boston College, for instance, each collected more than $1 million in 2009 bank payments while generating fewer than 50 new accounts between them—but mostly because the federal government felt young consumers were being exploited. Financial reform through the Dodd-Frank Act targeted excessive card marketing to college students. By 2013, affinity cards and accounts were half what they were in 2009, and by 2019, the latest year disclosed by the CFPB, there were just 220 college affinity cards, generating fees of $22.4 million for schools—and 49 of those 220 deals were terminated that year. Most remaining deals are with schools without major athletic programs—the Irish just one of about four dozen schools using athletics to push banking products, according to a review of filings with the CFPB.

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