How The New Credit Card Law Changes Things For Consumers Under 21

It is no secret that consumers are having a hard time with their finances nowadays. A slow economy and a high unemployment rate are major contributing factors. However, for many consumers, it is the inability to manage their finances, especially in terms of credit card usage, which has led them to financial instability.

According to a report from Congress, American consumers are paying almost $15 billion in terms of credit card fees every year. With the current state of the economy and the job loss many consumers are experiencing, that number is also continuing to rise. This is a grave matter not only for consumers but also for lawmakers as well, one which most hope the new Credit CARD Act will address.

One of the riskiest and also most profitable consumer segments that credit card companies target are those under 21 – usually composed of students still studying in college. A lot of the credit card companies in the U.S. target college students specifically for their credit card marketing campaigns.

Marketing credit cards on campus are already almost a tradition in college campuses during the opening of classes. Credit card companies usually offer incentives such as free food, clothing, accessories and even electronic devices to encourage students to apply for credit cards. Despite the apparent inability of most college students to pay off their credit card debt, credit card companies still want to sign them up. By their reasoning, should college students have trouble paying off their credit card debts, their parents will inevitably step in to help them out. Credit card companies also earn more when card holders are delinquent in their payments due to the fees and interests that they collect.

But, with the new credit card law in place, credit card companies will no longer be able to market as brazenly as they used to to consumers below 21 years of age. The tighter regulations that the new credit card law brings means that credit card companies are prohibited from marketing their credit cards in dormitories, college campuses and even in athletic events to consumers who are under 21 years old. Consumer Law Center attorney, Gary Hinck says that the 21 age limit may make a bit of difference, adding that he cannot imagine a parent co-signing for his or her under-21 child to get a credit card.

The new law will be going live this February. The bulk of the consumer protection that the law provides will be enforced then. However, given the large amount of time that credit card companies have had to adapt to it – mostly in a not so consumer friendly way, whether the law will actually provide the protection it promises remains to be seen.