Credit Cards for People Under the Age of 21 Will Be Much Harder to Get

The newly passed credit card reform legislation which will go into effect in February, 2010 has been talked about extensively for the most part with one exception, the restrictions it will place on people under the age of 21 for getting credit.

As we all know, until this recession started just about anyone and their brother could easily get approved for a credit card whenever they wanted to. That held especially true for college students who have long been a prime target of the credit card companies.

Well that is all going to change when the legislation takes effect. Many consumer advocacy groups and legislators feel that the credit card companies have been taking advantage of the general naïveté of college students when it comes to finance, specifically the use of credit cards.

A recent survey conducted by Sallie Mae, the student loan giant, found that the average credit card debt for an undergraduate student is currently $3,173. That is up a whopping 46% in the past five years. The survey also found that students possess five credit cards on average.

Now $3,173 may not seem like a huge sum of money but when you do not work full-time, and in many cases have no income at all, it is quite significant. Couple that along with the fact that about half of all students are receiving financial aid that they will have to pay back and you can easily see that this is a financial hole that the students are digging for themselves.

For these very reasons the Credit Card Reform Act will place the following restrictions on credit card issuers when it goes into effect in February of 2010:

  • Anyone under the age of 21 that cannot prove that they have the ability to repay debt through income or by other means must have a parent or guardian cosign before they will be issued a credit card.
  • The only way there will be increases in the line of credit issued is if the cosigner agrees to it.
  • Credit card companies will be prohibited from marketing pre-screened offers to anyone age 20 and younger.
  • Colleges, universities and alumni associations must disclose any agreements they have with the credit card companies in which they share contact information of current students, alumni, faculty and school employees.
  • Credit card companies will be prohibited from using free gifts such as T-shirts, food, or any other such things as enticements in exchange for a student completing a credit card application.

Credit card issuers have long been extremely aggressive on college campuses at the beginning of each semester when it comes to marketing to students. Many would say that it has gotten completely out of hand.

The California University system for instance has completely banned credit card companies from soliciting on campus and other university systems have put similar restrictions on credit card marketing activity on their campuses.

There are some however, that say that the students are adults and they should be allowed to make their own decisions as to whether or not they want a credit card. Not surprisingly the credit card companies themselves have taken this stance.

But we here at believe that the safeguards are a good thing. The truth of the matter is that time and time again far too many students have show that they are not quite ready to responsibly use a credit card.

And no one said that students will no longer be able to get a credit card. They just won’t be handed out like candy anymore.

Related Information:

  1. Credit Card Companies Marketing On Campus Credit card companies have aggressively marketed to students for many years now. But apparently that in your face marketing strategy has reached critical mass at some college campuses. Michigan State…
  2. Student Credit Card Debt Reaches Record Levels We all know that college tuitions are spiraling out of control. And now I’m afraid there is some more bad news to add to the equation. Credit card debt for…
  3. Illinois Cracks Down on Campus Credit Card Solicitations Gov. Pat Quinn made a bold move recently when he signed into law legislation that will greatly restrict the ability for credit card companies to market on campus. No longer…
  4. Student Credit Cards – A Look at the Advantages and Disadvantages of Having One There most certainly is a lot of talk about the perils of credit cards lately and most of it has been spurned on by the poor economy. While much of…