When the credit card bill becomes active, students, specifically college students, are going to find that getting a credit card will no longer be as easy as it is right now. That's because the credit card bill will be regulating how credit card companies market their products to the under-21 market.
The legislation is grounded on findings that, among credit cardholders, college students are one of the most burdened with credit debt. So much so that, by the time that they graduate, they are already carrying debts that won't even be paid up after several years of employment. The credit industry is quite aware of the situation but it isn't slowing down their marketing of plastic to college students. They're making enormous profits from this particular market and building up long-time customers, so why should they?
What Is Credit?
The basic problem is that many cardholders, and not only college students, don't quite understand what credit is and how it should be handled. In the financial industry, credit is simply payment that is deferred for some time. The consumer can purchase an item with the understanding that it will be paid at a later date. Of course, the one who actually pays for the item is the credit company which is also who the consumer actually owes credit to. The credit company profits from being the one to take the risk of offering credit and offer the consumer credit convenience by charging interest.
Through the many years that credit companies have run their business, they have discovered many ways to earn from interest. That is why, nowadays credit cardholders have to contend with compounded interests and tempting 0% interest offers which soar to 10% once a payment is missed.
For college students, the temptation and the opportunity to spend is considerably higher compared to other credit cardholders. College students are huge plastic users. They usually use it for dining out, vacations and tech-gadgets. The convenience of using plastic coupled with the satisfaction of getting what they want right at the moment they want it, even though they will have difficulty paying for it in the long run, often get college students into a lot of credit card debt trouble.
The problem can ultimately be traced to responsibility. How responsible can students actually be when it comes to credit? Not very much, judging from student credit card debt records. With the credit card bill in place, this will hopefully change for the better. The bill enforces many measures which will ultimately give students a better understanding of credit while protecting them from making serious mistakes which will jeopardize their financial future. A great first step towards credit responsibility.