JUL 23, 2010
What person between the ages of 18 and 20 wouldn’t want a credit card? Unfortunately for them, the recent Credit CARD Act may make it harder than ever before.
Are the new limitations really so bad? There was a time that card issuers were dishing out credit cards to college students as fast as you can say freshman. Studies indicate that the early issuance of credit cards hasn’t been fair to one of the involved parties… the youth. In fact, the passing of the Credit CARD Act was dedicated in large part to the protection of young consumers. In general the Credit CARD Act was meant to prohibit some of the unfair credit practices and deceptive credit offers out there, which keep consumers perpetually in debt.
As many of us know all too well, credit mistakes made while you’re young lead to years of misfortune. It’s true that some young folks are able to manage finances responsibly, but others need the safety net the Credit CARD Act provides.
Studies by Sallie Mae, the leading provider of student loans, indicate that college-age card holders may not have the best financial practices, because of little to no formal education or real world experience. Most break the number one rule of credit cards: 82 percent carry a balance and incur financing charges monthly as a result. Further, 60 percent of undergraduates experienced ˜surprise at how high their balances reached; and 40 percent said they charged items knowing they didnt have the money to pay the bill.
Who wants to learn about debt the hard way?
There are still ways young people can gain access to credit. In particular, the following four options should be considered:
Common sense says that young adults shouldn’t take on credit card debt before they are financially independent. Buying stuff, even if its something practical like text books, isn’t worth a ruined credit score.