Thursday, August 6, 2009

New Credit Card Laws

A news article on highlighted some new laws that could make it difficult for people under the age of 21 to get a credit card in their own names. The rules would require a cosigner for those who can’t prove that they have their own means of repaying debt. It would also prohibit companies from sending out the pre-approved credit card offers to people under 21.

When I was in college here at Lamar, credit card representatives were allowed to set up booths on campus and solicit students to sign up between classes. They offered freebies of every type. You’d be amazed that a student would sign up for a credit card, just to get a free t-shirt, or whatever else they were giving away that day. Sadly, I’ll admit that I was pressured to sign up for one of these credit cards. You know what my “free gift” was…some greeting cards with black and white pictures of cute kids on them. Yeah, I know…sounds silly.

I was very responsible with my credit card and eventually closed the account because I realized I didn’t really need it. I did keep another card that had a higher limit, for emergencies (although I can’t remember any real emergencies I needed it for). I charged some things on occasion, but always paid off my account in full. Unfortunately, I did know other students who had maxed out their credit cards, and certainly weren’t paying them off in full.

So what do you think about these laws, which are slated to go into effect in February 2010? For more information you can read the whole article HERE.

1 comment:

Sarah Renee said...

I think it's unfortunate that too many people, especially my age, don't realize what credit is for. Although it is true that too many 18 year olds get a credit card right after their birthday just so they can spend all that money, I don't think that the responsible 18-20 year olds should have to suffer by not being able to build their credit in their college years. To me, it was very important that I get a credit card early so that when the time comes in a few years, I'll at least have a record behind me showing that I'm dependable, responsible, and always pay my bill.
I do think that it's very important for undergraduate students to build credit because once they graduate with their degrees they will probably need that credit for financing a more dependable car for transportation to work and/or grad school, getting their own apartment, applying for other types of credit, etc. This is the sole reason that I applied for credit at 18. I was declined a couple times, and I know that even just applying hurts your credit score a bit, but I still hoped that the recession wouldn't completely mess me over by making lenders even more wary of the younger applicants.
At present, I am only 19, so it hasn't been very long that I've had credit. I only use the card every now and then to keep it active and I immediately pay the bill. What too many people don't seem to understand is that credit isn't "extra money" you get to just spend, it's money that you have to know you will have, or already have, to pay back. All for the purpose of building your credit for the future, when it will be necessary. So when you actually have to buy something that you can’t afford at the moment, but will be able to pay back, you’ll have a record saying you are trustworthy to lend to. You know?
I guess if these are going into effect any time soon I consider myself very lucky. I would not have had a cosigner because my family is horrible with credit--but I’ve learned from them and I pay my bills when they are due. In a way, these laws are very smart, careful, and make sense. It’s just going to be unfortunate for those few trustworthy 18-20 year olds who don’t have anyone to cosign for them. Ehh.. My post is too long.