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Too Young for a Credit Card?

Written by Nickel - 22 Comments

Too Young for a Credit Card?In case you missed it, the CARD Act of 2009 went into effect on Monday. Among other things, the new legislation aims to curtail the marketing of credit cards to college students and others under the age of 21.

More specifically, the CARD act requires colleges to disclose any marketing agreements they may have with credit card issuers, perhaps by just posting the info somewhere on their website. Moreover, “tangible items” (a.k.a. free stuff such as gift cards, t-shirts, etc.) cannot be used to induce students to apply for a credit card within 1,000 feet of campus.

The CARD Act also prohibits credit card issuers from extending credit to anyone under 21 unless there is an over 21 co-signer or the young applicant can demonstrate and independent means of repaying their debts (though this requirement might not be very effective).

This all begs the question of whether or not these sorts of protections are a good thing. It’s a bit like the military/drinking age thing. If you’re old enough to serve the country, shouldn’t you be old enough to have a beer? The same logic could easily be applied to credit cards.

That being said, I don’t have any real problem with protecting college students from their own stupidity when it comes to finances. What about you? What do you think about these age-related restrictions?

Published on February 24th, 2010 - 22 Comments
Filed under: Credit Cards

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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22 Responses to “Too Young for a Credit Card?”

  1. 1
    Lakita (PFJourney) Says:

    I think the law was drafted under good intentions…or as you said “protect students from there own stupidity”

    As someone that was ignorant to the consequences of signing up for credit cards for the free phone card….I can appreciate the law.

    However, I think education would be a better approach.

    I here the military analogy a lot and it is valid…but here is another analogy:

    We need a license to drive, get married, own a gun etc… why not some sort of certification before being issued a credit card? I’m not saying everyone needs to become a CFP, but an understanding of credit, rates, fees etc

  2. 2
    jim Says:

    Credit card companies were basically praying on college students with the knowledge that mommy and daddy (or Uncle Sam’s subsidized guaranteed student funding) would bail out the student’s credit card debts. SO I think it makes sense to limit the banks in this category.

    I generally think that “demonstrate and independent means of repaying their debts” should be a requirement for anyone to get a credit card. If the banks lend money to people who have no means to repay it then something is very wrong there.

  3. 3
    Katrina Says:

    I have a HUGE problem with this. So as a college student, I can’t get a low limit (few thousand dollar) credit card. But I can sign documents for 100k in private student loans at 8-12%+ interest rates?

  4. 4
    Thankful Says:

    Katrina makes a really valid point about private student loans. I dislike generic age restrictions like this — I had more problems with credit card debt in my late 20s than when I was in college. I’m fine with restricting credit card companies on campus, but mandated age restrictions? I think it only just delays learning to act like a responsible adult.

  5. 5
    Ryan Says:

    My issue is that the law makes it sound like people over 21 don’t have to prove that they have income. I don’t get that.

    I’m not exactly a fan of credit card companies, but if you’re a legal adult, I think it should be up to them to extend you a credit line.

    I agree with Katrina, it doesn’t make sense. If anything, college students might just start using student loans instead of credit cards to pay for stuff they don’t need.

  6. 6
    lucas Says:

    …quite a tangled web of political nonsense and oppression — no wonder the wizards in Washington D.C. have destroyed the economy.

    Their nonsense-logic goes like this:

    - 18-year-old citizens are mature & trustworthy enough to vote — analyzing and selecting the best candidates & policies …resulting in wise laws, regulations, and vast Federal policies over everyone (including detailed regulation/control of the Credit-Card industry.

    - However, 18-year-olds are way too immature & ignorant to even handle a simple, personal Credit-Card account.

    Washington politicians can’t have it both ways… and still claim any logic or justice in their actions.

    A cynic might suppose that logic, justice, and citizen-rights are routinely ignored in Washington.

    18-year-olds are not wards of the state.

  7. 7
    dan Says:

    Is everyone forgetting that not all people go to college? How about the kids that enter the workforce after highschool?

  8. 8
    Erika Says:

    I understand the “logic” behind this, but it would penalize students like me who had parents with terrible credit, i.e. no cosigner. I’ve had the same card since 1992 (my freshman year) and have handled it responsibly.

  9. 9
    Chris Says:

    The root cause of the problem is people are dumb with money. Particularly young people. The solution is education not law. These laws may delay the consequences of ignorance, but they will just be learning their lessons somewhere else or at a later date. Meanwhile, our friends in Congress will hand pick some convenient stats and pat themselves on the backs for a job well done.

  10. 10
    Anon Says:

    The only things this does is 1) penalize young adults who would be responsible with credit, which delays their ability to build a positive credit record and will therefore have to pay more for car insurance, etc. and 2) delay but not prevent irresponsible young adults from learning how to use credit cards. The solution is education not restriction.

  11. 11
    Keith Morris Says:

    I agree with those who have been saying the solution is education. Sounds like a call to action, FCN! What can we finance bloggers do to help educate folks about this stuff? :-)

    We recently recorded a podcast episode about some of these new laws. Worth a listen: http://www.lifetuner.org/blog/.....rd_changes

  12. 12
    Rosa Says:

    @Dan – young people in the workforce can get a credit card because they can fill out an application proving income, just like anyone else.

    Companies were offering cards to young people who did not have jobs or even job histories, and marketing through partnerships with colleges which were not disclosed.

    So the law puts young people on the same footing as everyone else.

  13. 13
    Ken Says:

    I love the age restriction. I talked to a girl yesterday who got her first one as a freshman registering for college. It was actually part of the walk-through….these kids don’t know the dangers.

  14. 14
    ctreit Says:

    I agree with you and most of the comments. The age restriction is pretty silly. Why pick 21 for credit cards and drinking anyway?

    I also think that the problem lies in education – both, at home and in school. High school grads should have some sense of responsibility and knowledge about life in the real world when mom and dad don’t put a roof over their heads anymore.

  15. 15
    kev Says:

    I’m mixed on the idea of an age restriction. I want to say that it should be based solely on a person’s ability to repay. At the same time, maturity is a factor that needs to be considered. I’m not sure age is the best way gauge maturity, but it’s we all have. We all know someone that is totally unable to handle credit. You could hand that person a card with $25.00 dollar limit and they would somehow manage to totally destroy their credit with it. There are many laws out there that protect us from ourselves – this is just one more.

  16. 16
    Ryan Says:

    I’m really curious to see how much of an “income” you really need before you’re approved.

    I assume proof of income will be a tax return?

    I turn 18 in a week…will be interesting to see if Visa approves me based on the $1000 I made last year.

  17. 17
    bodark Says:

    Policy as usual, gives our friends in DC the ability to speak out both sides of their mouths (Kept kids safe from evil credit cards, but have built in work loop holes).. oh well.

    Small clarification though – Military and booze, only if you are stationed INside the USA. If your OCONUS (meaning else where), at your commander’s discretion. And most sane commanders understand, and allow the local laws govern (e.g. 16 to 18 years old).

    Guns… out of respect Nickel’s board isn’t political, I will ask each of you who can vote to study the law. Both sides, play it their way. But a fact is, when I was in uniform I was a hero. When I left service to wear a suit, I somehow was transformed into a threat to others that could not be trusted.. got me, just happened.

    But with all that.. GOD BLESS THE USA!! Bring on the summer BBQ!

  18. 18
    H Lee D Says:

    I agree that education is the answer. Instead of mandating that children can all do algebra and geometry to graduate from high school, how ’bout mandating that they can balance a checkbook, file a 1040EZ, and negotiate terms of service on a loan or credit card?

  19. 19
    Josh Stevens Says:

    “It’s a bit like the military/drinking age thing. If you’re old enough to serve the country, shouldn’t you be old enough to have a beer?”

    Folks under age 21 who are in the military can have a beer legally.

    So, if you are under 21 and want to use this analogy, I say, sure… if you join the military, you can get a credit card. Any takers?

    I think, rather than the age issue, the better solution would have been to ban credit card hawkers from campuses of publicly supported institutions and from mailing offers to dorms, etc.

  20. 20
    Kevin Says:

    I remember a few years ago in college, they would have booths set up next to every major building and would target students with aggressive techniques…promising free gifts, no annual fees, the likes.

  21. 21
    Joe Says:

    I have a huge problem with the limiting of extending credit. I remember when I signed up for my first credit card 2 years ago when I turned 18 and only got a $500 limit. It simply was not enough for me. I have yet to pay any interest on that card and I am not in debt at all, so everything I charged on my card (now cards) has been paid off and was paid off within the month.

    If you’re wondering how I spent that much money within a month then it’s because I used the card for everything I bought. If I were stuck at a $500 limit right now then I would be screwed and would need at least 3 other cards to make up for not having a decent credit limit.

  22. 22
    Eric Says:

    Don’t agree with it.

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