New Credit Card Rules for Young Adults
A report released by Sallie Mae reveals that an average student carries a burden of more than $3000 in credit card debt. At the projected rate, this debt could exceed $8000 pretty soon. The same study also revealed that most students had at least one card. Credit cards have become very common with students. And if students are also charged at the same rate, the debt mount up and results in credit card debt. This leads to a bad credit history and poor credit score. Furthermore, the student is plunged in credit card debt that is very hard to manage or overcome.
If you graduate with credit card debt, your plans may go downhill. Fortunately, the Credit Card Accountability Responsibility and Disclosure Act (CCARD Act) has been formulated to ensure that students have fewer financial obligations. This Act lays down specific guidelines to slow down the rate of credit card debt:
No Telephone Credit Card Approval
The new rules state that a credit card cannot be issued to anyone under 21 who hasn’t submitted a written application. This implies the restriction of telephone credit card approvals for teenagers by credit card issuers.
Applicant Must Have Income or Cosigner
Any applicant under 21 must have a cosigner. The cosigner should be over 21 and can be a parent, relative, legal guardian or anyone else. The cosigner is jointly liable for charges made on the account. The cosigning can be bypassed if the applicant proves that he has an income. The income should be enough to repay the charges. In other words, the applicant’s income should prove his ability to repay the debts.
Campus Credit Card Marketing
College students are generally lured by credit card companies with free t-shirts and other apparels, accessories and other attractive offers. The new rules have made this practice illegal. Credit card issuers can no longer lure students by giving clothes or other things in exchange for credit card applications. As a matter of fact, they are prohibited from offering any tangible item to opt credit cards. This includes credit card marketing within the campus, near the campus or even at events that are related to, or sponsored by colleges. Unless agreed by the applicant himself/ herself, credit card companies cannot send any pre-approved credit card offers.
But remember, these restrictions and guidelines are meant to prevent young adults from falling prey to credit card debt. These credit card rules are aimed at bringing in a fair system of credit. And if you are a student looking for loans, it is essential that you know your rights. However, these regulations do not directly solve debt problems. Solving debt problems needs meticulous planning and expert advice. So always think twice before you opt for a credit card.
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