Does the New Credit Card Bill Help or Hurt Young Consumers?
The new credit card act, which was signed into law last May, and is set to go into effect in June 2010, has placed many new restrictions on credit card companies, one of which involves limiting the availability of credit to anyone under the age of 21.
Credit Card Debt and Young Consumers
We all know the familiar sight of a busy college campus with credit card companies set up around every corner, luring young college students into applying for a credit card that they may not be able to afford.
The new law essentially states that no one under the age of 21 can obtain a credit card unless a guardian, spouse or parent co-signs for the credit card. An individual under the age of 21 may obtain a credit card if he/she is capable of providing proof of sufficient income to pay the credit card bill. In other words, if you are a college student with little to no income, don’t expect to snag a credit card under this new law.
Advantages of the Bill
The credit card bill, through this provision, is designed to protect college students who will likely become inundated with credit card debt, even before they graduate from college.
Many legislators also support this bill’s provision of a co-signer for individuals under the age of 21, as this could help young consumers learn to handle credit in a more responsible manner, as their parents will be overseeing the account.
Although this law was enacted to protect young people from racking up credit card debt that they couldn’t afford to pay back, it may also hurt their financial future.
Disadvantages of the Bill
Although the bill has many supporters, it also has its share of naysayers who complain that, without sufficient credit history, many college graduates will not be able to rent an apartment or purchase a car. In other words, if a recent graduate has no credit history, his or her options may be limited regarding independent living after graduation.
The question still remains: when is it the consumer’s job to act in a responsible fashion, and should the government stipulate who should and should not receive a credit card? There are many irresponsible young consumers that will be protected by this law; however, there are just as many responsible young consumers who may lose out on the opportunity to build their credit because of this law.
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