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.