While many first-year college students return home for vacation with new friends and a newfound independence, a great number have also accumulated something less ideal: massive credit card debt. Enticed by offers of giveaways and free food, and absolutely no requirement of any income or past credit reports, many college students fall into financial traps.
On Friday, Feb. 19, the Credit Card Accountability Responsibility Disclosure (CARD) Act of 2009, a law that will now provide protection for college students from these credit card issuers, officially went into effect.
Aimed specifically to help young college students avoid credit card debt, the law requires that anyone under the age of 21 must either have a cosigner or some way of proving they will handle the card responsibly, such as a consistent income or a satisfactory credit rating.
Card issuers often come to college campuses, including Mount Holyoke, in search of students who may be easily convinced to sign up for a credit card. The CARD Act now lessens card issuers’ ability to do this in that it requires them to inform the college or university if they plan to market their cards on campus.
“Students without income, assets, jobs or credit reports have been issued credit cards virtually automatically,” Tim Mensing, student body president at the University of Washington, told U.S. News.
Ten years ago more than half of college students in the United States had a credit card listed in their name. While the popularity of debit cards has caused this number to decline, according to a study done last year by the market research organization Student Monitor, 37 percent of college students have a credit card, and within that number 47 percent acquired their card while in school. Furthermore, 40 percent maintain an average balance of $495 from one month to the next and choose not to fully pay their bills.
Shannon Scott ’12 said, “I like having a debit card because money automatically gets pulled from my account, so I don’t have to worry about having to pay a credit card bill at the end of the month. It’s a safety thing.”
Emaan Ahmad ’13 agreed with Scott. “Because of the current situation, I don’t think banks would take chances on kids with bad credit. I mean, if you see a bag and you really want it…”
The two largest card issuers in the United States, Citigroup and Bank of America, both made statements to U.S. News that they are in total support of the CARD Act.
“I think it is a good idea. Credit card companies stake out college campuses for a reason. These kids under 21 don’t know what they’re doing. Good credit is important, especially now. I think it’s a good idea because if you destroy your credit you’re screwed. [These students are] too young to have bad credit,” said Angela Johnson FP’11.
However, there are several drawbacks to the CARD Act. For instance, credit cards have traditionally been a very simple way for college students to develop good credit before they need to worry about major expenses such as buying a car. As this law essentially cuts students off from credit, the long-term effects may prevent them from being able to take out loans or secure an apartment as easily as they may have been able to with a strong credit score.
“I think you should be allowed to have a credit card when you’re eighteen because that is the legal age for almost everything else,” said Danielle Crouch ’12.
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- Public Safety arrests campus credit card thief
- College gets a D on endowment transparency on Green Report card
- Forced philanthropy and the new One Card:
- Stimulus plan to provide relief for college students
