Fewer credit cards for the under-21 crowdby Tim Manni
We’ve been following the fallout, both good and bad, from the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (the CARD Act). One of our favorite provisions is the requirement that credit-card bills get mailed out at least 21 days before payment is due, instead of the usual 14 days.
While not all of its provisions are law yet — most take effect next February — one of them will make it more difficult for those under 21 to get a credit card:
There’s also a provision that specifically concerns young people: Under the new law, no one under age 21 can get a credit card unless a parent, guardian or spouse is willing to co-sign or unless the young adult has proof of sufficient income to cover the credit obligations.
The article quotes a Sallie Mae study that shows a steady increase in the percentage of college students with at least one credit card — and a big hike in per-student debt, mostly attributable to tuition, books, and such.
Reactions are decidedly mixed. Supporters point to “an extra layer of protection” when parents have to co-sign (though that’s not required in all cases), while opponents fear that the new rules make it harder for responsible young adults to build good credit histories:
”It may be harder when you graduate to get a car loan or an apartment because you’ll have what’s called a thin file,” says Nessa Feddis, vice president of the American Bankers Association, a Washington-based lobbying group.
And, as has been pointed out previously, all these new restrictions come at a price in the form of fewer goodies and higher fees.
MSN points out that when you hit 18 you enjoy a lot of new privileges — you can vote, enlist in the military, and try to get out of jury duty (kidding! It’s not that bad!).
Exit question: how many under-21 readers have somehow managed to manage their credit cards without getting in too deep?