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?
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
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.
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?
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.
…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.
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.
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.
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.
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.
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.
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!
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?
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.
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