Rate hikes, fees, Double-cycle billing .... are just a few of the credit-card practices that have trapped millions of consumers into a life of constant worry over mounting debt.
Beginning Monday, Feb. 22nd, the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) will take effect. New rules will be put forth for credit-card issuers in order to protect consumers more than ever before in history.
Here are the key changes that the new law puts forth as they relate to college students and young adults, as well as some exceptions that could still allow student to get in trouble with credit cards.
• No credit cards for college students unless co-signed by a parent or they can demonstrate "ability to pay."
• No credit-limit increases if you are under 21 and have a co-signer without that co-signer's permission.
• No credit-card marketing and freebies on college campuses.
Exceptions and Loopholes:
• Issuers will likely start appealing to parents to co-sign their children's credit cards. And the Federal Reserve has specified that issuers have the option of keeping the parent on the hook even after the young person turns 21, Wu says. "If that younger person keeps the credit card for 20 years, the co-signer is liable that whole time."
• Issuers are not allowed to give out freebies for signing up for a credit card on or near a campus -- which still allows them to set up shop near popular off-campus venues and offer freebies to everyone, whether or not they apply.
Credit cards are convenient if you don't always have cash on you, are helpful in keeping track of your expenses or in making large purchases, and are a convenient way to borrow money. But if you decide to use them, be sure to choose a card that fits your needs.
Some Questions to Ask Yourself Before Applying for Credit
1. Do I need this?
2. Do I need this now?
3. Can I wait until I have cash to pay for it?
4. Can I get credit?
5. How much more will I pay if I buy on credit?
6. Can I afford the monthly payments?
7. What is the total cost of the credit?
8. Are there any fees?
9. What is the annual percentage rate?