2010 Promises Stricter Credit Card Regulations For College Students
Credit card companies are in the business of providing credit cards for profits. Finding markets for their products is often a key to success for a credit card company. One particular market that credit card companies have had great success on are college students.
Every year, thousands of young Americans flock to several college campuses in the country for their college classes. Usually, during every opening semester, the hallways of universities serve as the temporary homes of several booths and kiosks set up by credit card companies looking to sign up a few college students for their credit cards. A majority of these marketers also employ high pressure tactics to convince college students to sign up for their credit cards. These tactics usually include offering gifts and freebies such as consumer electronics.
Experience has shown that college students do not make the best credit card holders. College students with credit cards usually use their credit cards on anything ranging from school supplies to tuition to vacations. What this often means for college students is a lot of debt even before they have the proper means to pay those debts off. SalliMae, a firm managing educational loans to the tune of $188 billion recently stated that college student credit card use was the highest recorded last year. According to the figures, the average senior college student graduating from college owes $4,100. that is a huge jump considering that, in 2004, the figure was at $2,900. The firm also states that the average college freshman already has a debt of $939 for last year. In 2004, the figure was $373.
Because of the worrying trend of credit card use among college students, the Credit CARD (Card Accountability, Reliability and Disclosure) Act contains provisions specifically designed to help college students avoid getting sunk in credit card debt. Title III of the Credit Card Act is titled “Protection of Young Consumers”. This new legislation will make it harder for college students to apply for a credit card. College students who will want a credit card will either have to provide evidence for their ability to pay off their debts or have an adult co-sign for them. The act will also require institutions of higher learning to disclose publicly their marketing agreements with credit card companies. Credit card companies will also be required to stop marketing directly in college and university campuses. Nor will they be able to offer enticing gifts to lure young credit card holders.
The Credit CARD Act will not be going live until February of next year and, in fact, this semester will be the last time that credit card companies can ply their wares to college students. Come next year, college campuses are going to be relatively credit-card-campaign-free.
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