New credit card laws will affect college students

College students have been a target for credit card companies for some time, but that will soon change because the Credit Card Accountability, Responsibility and Disclosure Act has taken effect. In an effort to enhance consumer protection and hold credit card companies more responsible, the CARD Act ends certain fees and the increase of high interest rates.

Issuers must now disclose information such as how long it will take customers to eliminate their debt if they make only minimum monthly payments.

“This marks a turning point in helping to protect consumers from practices that have gotten us in the hole we’re in now,” said Jared Bernstein, chief economic advisor to Vice President Joseph Biden.

In the past, credit card companies have used unfair tactics when doing business with certain groups, especially with college students. One study, released by the U.S. Public Interest Research Group, reported that 76 percent of college students confess to being targeted by credit card companies via tables set up on or near their campus. Nearly a third of students were enticed by offers of a free gift upon signing up.The new act makes it illegal for banks to solicit within 1,000 feet of a college campus.

It also outlaws free gifts in exchange for filling out an application and forces banks to disclose the details of any agreements they may have with a college. Another effect this new law will have on college students is that, for people under 21, it will be much more difficult to obtain a credit card. Those under 21 must have a parent co-sign or prove they are financially independent. According to Bernstein, these laws are designed to help college students.

“It’s unfortunate when young people get in over head with credit cards,” he said. These new laws will cut down on pre-approved offers and puts responsibility on the institutions. He explained why 21 was chosen as the minimum age. “If you look at statistical evidence for credit being used in an unsafe or reckless manner, there is a spike in the early 20’s.”

A new study released by college financing company Sallie Mae reveals that the average undergraduate carried $3,173 in credit card debt last year, the highest level on record.
24-year-old Georgia State senior Stephanie Elaine admitted to racking up substantial debt throughout college.

“I went plastic crazy,” said Elaine. “ I was approved for two credit cards and maxed them both out. It was the biggest mistake.”

While she has since paid off her debts, this is not the case for many college students, whose purchases follow them well into the future.

Bernstein hopes that colleges will educate students about money by offering debt management classes and orientations to help them learn what they are getting into when opening up a credit card. With respect to co-signers, documents will clearly state what that person is getting into before they sign any agreement.

“I don’t expect loopholes. Most of these rules are quite simple and straightforward,” Bernstein said. 

• Facebook Comments
• Site Comments

Be the first to comment on this article!

Add comment


I am not posting spam. I understand posting spam or other comments that are unrelated to this article will cause my comment to be flagged for deletion and possibly cause my IP address to be permanently banned from this server.

Enter the characters in the image above:

log out