I was on the phone with my cousin who was ranting about this law that will take effect in February 2010. See, my cousin just started attending university away from home and she was excited to finally be able to apply for her student credit card. The excitement faded, however, when she heard about the Credit CARD Act of 2009. Although this law will make college people less vulnerable to fraud and bad credit score, this will also make it harder for those who wish to have a student credit card to acquire one.
This new law sounds like bad news to students. Come February, my cousin who is under 21 years of age will need to have a co-signatory older than twenty-one, because she has no income. The co-signer, probably one of her parents will have to be jointly liable to the credit card company. This also means she cannot request for an increase in limit without the signature of a parent. She can only get away with getting a student credit card on her own if she attaches with her application a proof of income, which she does not have at this point.
My cousin will also stop enjoying freebies that used to come with student credit card applications, like shirts, movie tickets and others. This law specifies that there should not be anything to lure students from actually applying for a card. Plus, students will less likely receive pre-approved offers because credit rating companies like Experian, Equifax and TransUnion will be prohibited to provide reports of consumers under 21 years old to credit card companies.
This law is not just a two-way road between students and credit card companies. Colleges and universities also have roles in making sure the younger generation does not succumb to unnecessary credit. It is common knowledge that the schools, as well as the Alumni Associations, get a percentage amount for every credit card application of its students or members. When this new law takes effect, they will have to disclose figures, so the students will be aware. This will lead them to make better decisions. The universities are also urged not to announce the schedules when marketing people from credit card companies will visit.
Overall, this law discourages students like my cousin to avoid applying for a credit card especially when they still are not earning their keep. I guess my cousin will just have to wait for the proper time. I am sure she will agree that a debt she cannot afford to pay is not something she needs at this time.