Credit Cards

What the Credit CARD Act Means for the Under-21 Crowd

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Card-act-graphic You're tuning in to our week long series on what the Credit Card Accountability, Responsibility and Disclosure (CARD) Act means for you, the consumer.  Yesterday, we covered how the CARD Act aims to curb excessive fees charged by credit card issuers.

Today, in the third installment of this series, we talk about the protections for students – or those consumers under the age of 21. 

This one carries mixed implications.  On one hand, it does a great job at protecting students from predatory credit card practices. On the other, many feel that it does little to address the lack of financial education needed to teach college students real life financial management skills. The argument is that without the additional financial education requirements, are 21-year-olds really any more prepared to make smarter financial decisions than they were at 18? 

We'll let you be the judge.  Here's what you need to know:

  • Credit card issuers must verify proof of income or
    otherwise require a co-signer before issuing a credit card to consumers
    under the age of 21.
  • Credit card issuers
    cannot send prescreened card offers to those under 21 unless they have
    consented to receive such offers.
  • Card issuers
    cannot raise the credit limit on an account for persons under 21 with a
    co-signer, without written permission from the co-signer.
  • Credit
    card issuers are prohibited from providing free items in exchange for
    applications when marketing to students on or near campus. The days of "credit card swag"
    (free t-shirts, frisbees), in exchange for credit card applications are
    over. Rewards programs offered with credit cards are still allowed,
    however.

What you need to know: While
the new rules were designed to protect young consumers, they neglect
one very important component – financial literacy requirements to teach
college students about credit card and personal finance management.
Without financial literacy requirements, 21-year-olds will be no more
prepared to manage their credit cards than they were at 18.

Do you feel the student protections go far enough? Or do they do exactly what they should?  Share your thoughts in the comments section below.

Join us tomorrow for the fourth installment of our week long series on the Credit CARD Act, in which we cover the new rules for enhanced consumer disclosures.


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