What College Students Under 21 Need to Know About the New CARD Act Rules

The days of credit card companies hounding students in the student lounge are over. Prior to passage of the Credit Card Accountability Responsibility and Disclosure Act (CARD), individual universities and colleges were the gatekeepers to the eager to sign up, but not always aware of the dangers, student population.

The flaw in this system is the monetary incentives credit card companies offered to higher education institutions. Colleges and universities are always facing budget cuts or need additional revenue for building projects -often  lax in keeping credit card company sales representatives off campus.

The new CARD act finally legislates restrictions on credit card companies offering unsecured lines of credit to anyone under the age of 21. Younger applicants will now need a co-signer, such as a parent, before applying for a revolving credit line. No changes, such as a credit limit increase, can be made without the co-signer's approval. Finally, you can't get the free frisbee or T-shirt on campus anymore, just for "applying."

There are loopholes in the system- of course. First, nothing prevents a credit card company from hocking high-interest and high annual fee credit cards just off campus. Second, if a student demonstrates an ability to pay the debt, either through employment or assets, there is no requirement for a co-signer. The CARD act isn't perfect, but it will hopefully limit the amount of consumer debt adults graduate college carrying.

Despite the loopholes, college students and other consumers under the age of 21 are going to face difficulties in acquiring unsecured lines of credit. However, a credit card isn't the only way to build credit. Other ways include -paying student loans, paying car loans, or paying back a bank loan. Even keeping a bank account in good standing is helpful because it builds a relationship with that bank, making lending in the future more likely. A great place to start is with a local bank or credit union.

Another potential result is credit counseling programs can reach people under 21 before they take on multiple credit cards and max out credit lines. Colleges and universities, no longer able to receive money in exchange for opening up their land for credit card application hunting, are free of any conflicts in providing such programming. It isn't unusual for an educational institution to give credit counseling, such counseling is required of every student with a federal student loan prior to graduation.
   
With credit cards now joining alcohol in the 21 or over age limit category, the CARD act may upset independent students who feel they are paying a high price for these new regulations. But on the bright side, students may have the chance to graduate and move on with their life -without being saddled with a boatload of high interest debt.  And that-- is priceless!