The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), implemented on February 22, offers new consumer protections and places greater restrictions on the changes that credit card companies can make.
The US Census Bureau estimated that there will be approximately 181 million card holders in 2010.
The Better Business Bureau recommends that cardholders should review the new provisions of this act, since nearly 75 percent of cardholders admit to not reading the fine print according to a recent survey.
“Credit card debt can mount when times are tight and consumers need to take the time to understand the fine print of their credit card agreements and the different fees and penalties that can chisel away at the family finances,” Wisconsin BBB President Randall Hoth said. “While the new CARD Act provides more consumer protections, card holders still need to keep an eye on changes to their accounts and respond quickly if they aren’t satisfied.”
One of the most significant changes that will affect college students is that one must now be 21 years old in order to get a credit card, unless someone else who is 21 or older cosigns it. A person under 21 may also get a credit card if they show proof of an income or a job.
Freshman Dan Stammer thinks that the provision may not be necessary.
“I think it’s a good idea, but at the same time, we are all adults here; we should be able to spend money however we want. It doesn’t make sense to me,” Stammer said.
Freshman Kevin Martinson, 19, already has a credit card but says that he rarely uses it.
“I have a card that’s both debit and credit in one, but I have never used the credit card part of it,” Martinson said. “If I needed to use it, I would, but I think that credit cards are generally pretty unnecessary for college students. So far, I have never needed it for anything.”
Zac Kolbas, also a freshman, thinks that the provision is a good idea.
“I have a credit card, and I kind of wish that I didn’t have one because it makes it so much easier to spend my money,” Kolbas said. “I know it’s like that for a lot of other people, too, so it’s probably for the best that they are doing this.”
Another provision states that credit card companies can no longer promote their services on college campuses, and they can no longer offer free gifts as enticements. Companies are also no longer able to send “pre-approved” unsolicited cards in the mail to people less than 21 years of age.
Stammer thinks that the absence of credit card solicitors will help him and his fellow students have an easier time getting to class.
“I hate walking through Reeve or around campus in the morning, and there are people handing out flyers and other pamphlets advertising things,” Stammer said. “It’s really distracting and it sometimes delays me from getting to class on time. I think that not having them on campus is a good idea.”
The Credit CARD Act is expected to help lower the debt of young people, according to an article on MSN Money’s Web site. Since credit cards are the source and reason for the mounting debt of many college students, the new age restrictions are expected to help the situation.
“Credit card companies will issue cards only to those with parents or guardians with good credit histories,” the Web site stated. “So, there will be an additional layer of authority to make sure inexperience does not lead to massive debt for young adults who have a parent or guardian co-sign.”
Kolbas says that credit cards can be either a good or a bad thing for college students, and it all depends on how responsible and experienced they are.
“I think that one of the main reasons why young people have so much debt is because they don’t have experience with credit cards and managing money,” Kolbas said. “But, if they can’t get a credit card until they are 21, aren’t we just delaying the debt a few years? I don’t think it will help that issue very much.”
Martinson agrees with Kolbas and points out some of the negative aspects of the provision.
“The downside of going to 21 is that people our age aren’t really going to have a chance to rack up any type of a credit score to prove that you can repay your loans,” Martinson said. “But people our age have to be able to understand where their money is and how to manage it correctly, and by eliminating that opportunity, we wont be able to.”
Either way, the Act is already implemented, and its effects will be felt by college students nation-wide.
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