Signed a few days before Memorial Day, the credit card bill provides wide ranging legislation to curb the rampant “profit-is-the-bottom-line” practice of credit card companies. Among the many areas the credit card bill will touch is the debt laden, below 21-year old credit cardholders. This particular population of credit cardholders is largely composed of college students.
Credit card debt problem among college students is well known within the credit industry and its observers. A survey recently released by Sallie Mae shows that 84% of the college student population carry at least one type of credit card. Surprisingly, on the average, a college student carries four credit cards. With their credit lines, the average college student has a debt balance of $3,173. This figure is three times that of four years ago. Considering that the average student does not have the income to pay off their balance, the debt problem among college students is a very serious one. A lot of college students actually graduate college already loaded with credit card debt.
College freshmen are perfect targets for credit card companies. Fresh out of high school and seeking to establish independence, especially in terms of money, college freshmen are easy prey for credit card sellers. Since most of them are also first time credit cardholders, credit card companies are also anxious to lure them in order to build up brand loyalty. So far, credit card companies have been very successful in their efforts, based on the increase of credit card ownership and debt among college students.
With the credit card bill in place, this will soon end. Legislation in the credit card bill strongly prohibits credit card marketing to consumers below 21 years old. Credit card companies will also be disallowed from marketing credit cards inside or near college campuses. Aggressive marketing strategies, which include giving away T-shirts, water bottles, and other items to lure in young consumers to apply for credit cards will also be put to an end.
However, credit card ownership will not be beyond consumers below 21 years old. In order to obtain a credit card, they only have to prove that they are capable of paying their credit or they can get a co-signer for the account. Co-signers are usually either one of the parents or a guardian. Credit card companies are also prohibited from increasing the cardholder's credit limits without written approval from the co-signer of the credit card.
Because the problem of credit card debt basically hangs on the responsibility of the credit cardholders, responsible credit and debt management will also be part of the orientation program of colleges for their new enrollees.