How Credit Card Reform Will Affect Those Under Age 21
It hasn’t been discussed much but as a part of the credit card reform package that will take effect in February of 2010 Individuals under the age of 21 will find it much more difficult to get a credit card. Up until this point it has been relatively easy for just about anyone to get a credit card, most especially college students. That’s all about the change.
We have written extensively about exactly what the credit card reform legislation is going to entail but we haven’t touched on the fact that it will be greatly curtailing access to credit for consumers under the age of 21. Let’s take a look at exactly what it will mean and how it will affect the 20 and under crowd.
Sallie Mae, the student loan lending giant, recently conducted a survey about credit card debt for students under the age of 21. The study found that the average amount of debt for undergraduates is currently $3,173. That is up a startling 46% from just five years ago. In addition, students possess on average, five credit cards.
That’s a pretty substantial amount of debt for people that don’t even work full-time, if at all. Now granted, the whole point of going to college is to better your chances of landing a good job upon graduation but as we have found out in the current economy, there are no guarantees of landing a job after graduation.
So in light of that, carrying over $3000 of credit card debt before people even reach the age of 21 is a rather sizable burden to bear. When you couple credit card debt with student loans, which the vast majority of students have, then you’re looking at a rather trying set of circumstances financially speaking as these young people begin to build their adult lives.
It is because of these factors that there will be restrictions placed on credit card companies issuing credit cards to people under the age of 21.
Basically what it means is this:
- People under the age of 21 will have to have a parent or guardian cosign for them or be able to prove that they have income or some other means of repaying debt before they will be issued a credit card.
- There will no longer be automatic increases in credit lines unless the cosigner agrees to it.
- Credit card companies will no longer be able to market pre-screened offers to people under the age of 21.
- Colleges, universities, alumni associations, booster clubs, etc., will have to divulge any agreements for sharing contact information with the credit card companies as far as marketing on campus, to the student body and alumni is concerned.
- There will be no more quid pro quos for filling out credit card applications on campus. That means no more free Frisbees, umbrellas, T-shirts, etc., will be used as enticements for completing a credit card application.
Many colleges and universities recognize that marketing to students on campus has gotten completely out of hand. For instance, the entire California University system has banned credit card marketing and solicitation on campus.
There are some proponents of allowing credit card marketing on campus, mainly the students themselves and of course, the credit card companies. The argument being that responsible adults should be free to make their own decision on whether or not they want a credit card.
And another, more recent argument is that credit cards are necessary to help pay for things such as textbooks and transportation. In some cases students are even using credit cards to help pay tuition.
Related Information:
- How Credit Card Reform Will Affect Consumers Find out how credit card form will affect you, if at all....
- Student Credit Card Debt Reaches Record Highs Student credit card debt continues to mount, reaching record high levels....
- Credit Card Companies On Campus Credit card companies are becoming ever more intrusive on college campuses....
- Credit Card Reform Legislation Passes The House or Representatives overwhelmingly passes credit card reform legislation and now it's off to the Senate....