New Guidelines for College Students and Credit Cards

There have been several bills proposed in the past to combat the unfair and deceptive practices of credit card companies soliciting college students to obtain credit. The Credit Card Accountability Responsibility and Disclosure Act of 2009 signed by President Obama on May 22, 2009 goes into effect on February 22, 2010.

The law states that no credit card may be issued to a consumer who is not 21, unless the consumer has submitted a written application to the card issuer: (1) by providing the signature of the parent, legal guardian, spouse, or any other individual over the age of 21 who can repay debt incurred by the consumer; (2) submission by the consumer of financial information indicating an independent means of repaying any obligation; or (3) completion of a financial literacy or financial education course designed for young consumers.

The law will ensure the following for students under 21:
1. Students under 21 will require a co-signer or proof of repaying credit card debt. Previously, a college student only needed a mailing address and their signature to get approved for a credit card.

2. College students will no longer receive from iPods, iPhones, car rides, CD/DVDs, food or other gifts in exchange for a free credit card. No more freebies or knickknacks on-campus.

3. Prescreened offers cannot be sent to students under 21 and credit card limits cannot be increased without the permission of the co-signer.

4. Colleges and universities and alumni organizations will have to annually disclose the terms of any marketing or promotional agreements they make with credit card companies. Schools often receive millions of dollars from credit card companies in exchange for soliciting credit cards to college students. Credit card companies also must file annual reports with the Federal Reserve Board detailing all marketing, promotional agreements with colleges and universities, alumni associations and school-related foundations.

5. The law encourages colleges and universities to adopt policies that restrict credit card marketing on their campuses. The law also encourages the colleges to require credit and debt management seminars as a part of new student orientation programs.

This is a huge step for college students and consumers under age 21. When I went to college I was bombarded by credit card companies on campus and signed up for a credit cad in exchange for a free t-shirt.

I had no income and was only 17 but was approved for my first credit card and by the time I was 21 I had 13 credit cards. This law will greatly help other college students who made or will make the same mistakes I did while in college. This will also help college students better manage their finances and be more accountable for their spending so when they graduate they will owe less money in credit card debt and hopefully be in a better financial situation.

6 Tips for College Grads

You graduated from college and received your diploma. Now what! Now you have to face reality and face the real world. First, get a job. Next, figure out what to do with your money but don't spend it all. Forty-percent of Americans live paycheck to paycheck and seventy percent of Americans live above their means. It can be tempting to buy on impulse and spend your money on everything you see but slow down and pace yourself. Here are 6 tips to help you live below your means and stay out of debt.

1. Setup a debt payoff plan. Setup a debt payoff plan to prioritize your bills including student loans and credit card debt. Start by paying off the smallest bills first, then use the money paid towards a previous bill and apply it to the next bill and continue this process until all your debts are paid.

2. Pay more than minimum monthly payment. If pay the minimum monthly payment you will end up paying 2 to 3 times what you actually charged due to the interest and finance charges that accrue on your balance. Try to send extra towards your balance each month.

3. Pay with cash. Pay for purchases with cash until your credit card balances are paid in full. If you pay for an item with a credit card you end up paying 112% the original cost of the item.

4. Start with your company's 401K as soon as you are hired for your first job. Do research to see what plan has the best options to help you achieve your retirement goals.

5. Diversify. Control your risks by investing in various mutual funds that are a combination or low, medium and high risk to limit your losses.

6. Buy insurance – health, life, disability. Many Americans go into debt due to medical bills and lack of insurance. Get at least basic health, life and disability coverage. Coverage is cheaper for individuals.

Credit Card Tips for College Students

According to Nellie Mae, 56% of undergraduates get their first card at age 18 and 91% of final year students have a credit card. 56% of final year students carry four or more cards. The average outstanding balance on undergraduate credit cards was $2,169.

As parents you have to teach your children how to use a credit card. Credit card companies are waiting for your students to go to college and get in debt. If you don't teach them about proper credit card use they will end up in debt and it will take them years after getting a full-time job to pay the debt off.

The credit cards that are promoted with on-campus are the worst credit cards students can get. You have to do research to find the credit card with the best interest rate and terms. Visit websites such as bankrate.com or creditcards.com to comparison shop.

Here are some tips to help college students when selecting a credit card:

1. Explain how credit cards work, the advantages and disadvantages and all the fees associated with credit cards such as: interest rate, minimum payment, grace period, and the finance charges, late fees, etc.

2. Talk to your children about who will pay the credit card. Many times students assume their parents will pay the bill. Discuss this before your child goes to college to manage expectations.

3. Offer assistance to help your child compare credit card offers or talk to your local bank officer who can help you review terms and conditions and compare rates.

Here are 5 to help prevent overspending on credit cards:

1. Pay off your balance each month.

2. Keep track of your credit limit.

3. Use for emergencies only.

4. Know your payment due date.


5. Do not get cash advances.

Parents you can also write your state congressman and representative to complain about credit card interest rates and marketing practices used on college students.