The credit card bill was drafted for the purpose of protecting consumers from the dangers of overusing their credit which usually results in heavy debt. Case in point: the current credit crunch is a direct effect of the large defaults that credit card holders started to do once the economy tanked and consumers began losing income.
The legislation in the credit card bill will changes some of the fundamental rules on how credit card companies run their business. The primary target is the preference of these companies to take on high risk borrowers in the hopes of earning more from them from interest and fee payments instead of from debt payments.
Credit card companies have been against the bill from the start. They claim that it will ultimately result in a drying up of credit, among other things. Although their statements are often times overblown, they are right about one thing: once the credit card bill becomes active, credit is going to be tougher to get. But that's not necessarily a bad thing.
Most credit cardholders who are under 21 are usually students who are attending college. Recognized as outgoing, adventurous and big spenders, they have long been a favorite target for credit card offers. Unfortunately, this has led to an alarmingly large number of graduating students carrying worrying amounts of debt. College students also carry an average of four credit cards and only a small percentage actually pay off their debts every end of the month. The result is a generation of American graduates carrying enormous debts even before they've landed a job.
Because of this, the credit card bill included some amendments protecting card carriers under 21 years of age. With the credit card bill in place, those under 21 will not be able to get credit cards as easily as they used to. They will either have to prove that they have an independent income capable of paying off their credit card usage or they have to have a co-signer for their application, which usually means their parents.
Although credit cards are harder to get, it does not necessarily mean that college students should miss out on the convenience of using credit cards. A viable option for them would be secured credit cards. Secured credit cards function similar to credit cards, only that they are secured against a deposit to the creditor from the card holder. Thus, when the card holder makes a purchase, his purchase will be secured. If he is unable to make the monthly payment, the credit company will simply take it out of his deposit.
With secured credit cards, college students have the convenience of using a credit card like service while staying away from the risk of going into debt.