Find the best credit card offers online.Consumers Union, a well known advocate of consumer rights, recently expressed its concern over some practices by the credit industry perceived as unfair to young American cardholders. The group aired its concerns as millions of college students head back to thousands of colleges and universities across the U.S. in just a few weeks.
According to the group’s representatives, credit card companies often target college freshmen in their marketing strategies. Card issuers also offer free gifts and other perks to college students, knowing that they are more likely to sign up for new cards. This has prompted Consumers Union to issue warnings to incoming students about the dangers that lurk with signing up for credit cards. They point out that unrestricted use of plastic can result in substantial debts by the time students graduate.
Fortunately, a new law is soon to take full effect next year, effectively curbing some of the credit industry’s widely criticized marketing practices. President Obama’s Credit Card Act of 2009 will place restrictions on many traditional industry practices. It will also prohibit Americans under below 21 from acquiring credit cards unless they find relatives to co-sign or provide proof of income. The same legislation will also regulate how universities and colleges allow card companies to hold trade fairs and similar activities to attract new cardholders. Banks and card issuers will no longer be able to provide gifts and perks to college students in exchange for their signatures.
The Consumers Union says that the new law is long overdue given the alarming rate at which college students have acquired credit cards and the subsequent debts. In fact, a recent study by Sallie Mae, one of the foremost financial institutes in the U.S., points out that 84 percent of all college undergraduates own at least one card. More than half of those surveyed admit to having four or more credit cards at one time. On average, young Americans graduate from college with $4,138 in credit debt. This figure, according to the study, is 44 percent higher than in 2004.
More alarming figures were unearthed by the study. Of the millions of college freshmen with credit cards, only 17 percent managed to settle their balances every month. The average interest rate on all credit cards owned by young adults is 14 percent, with many more paying even higher.
Rising education costs and lower credit limits can mean potential disasters for many young cardholders, according to the Consumers Union. The group says that proper knowledge and responsible card ownership are essential to avoid mounting credit debts.
