The New Credit Card Law and Student Credit Cards

It is a fact that 2 out of 3 American high school students have their first credit card which is not a bad thing. A student credit card is a great way to start building one’s credit history that can be used for the future.

In the past years, applying for a student credit card is very fast and no complicated requirements are needed. There are even credit card companies that hand out credit card offers to high school or college students like candy. However, this practice is about to change.

Last May 22, 2009, a federal law was passed by the United States Congress and signed by President Barack Obama. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 or Credit Card Act of 2009 will go in effect on February 22, 2009. This bill aims “…to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.”

How the Credit Card Act of 2009 Will Affect Credit Cards for Students

Here are some changes brought about by this bill when it comes to credit cards for students:

1. A student under 21 years of age can not obtain a credit card unless his/her parent, legal guardian or spouse (of legal age as well) is the primary cardholder.

2. Credit limit on such a card can not be increased without the permission of the primary cardholder.

3. Students under 21 years of age can apply for a student credit card without a primary cardholder to vouch for them IF they can present a proof of their regular income. Also, they won’t need permission to increase their credit limit IF they can present a proof of their regular earnings.

The New Credit Card Law: Is It Good News Or Bad News?

Having a credit card is one way of exercising your financial independence. It gives the cardholders the freedom to manage their own accounts.

Some students might find this as bad news since it will be difficult to apply for a student credit card but let us look at the brighter side of it. A credit card can help a student learn the true meaning of being responsible but let us not forget that many others who suffered bad credit because of incorrect credit card use. Bear in mind that how you handle your account can affect your credit history.

For parents, the new Law can indeed be a welcome change as the changes impose a reasonable limit to young credit cardholders without depriving them of their right to build up an early credit history.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit card articles that would help build student credit.

Copyright 2009

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