Financial Responsibility Now A Must For Teenage Credit Card Holders

Come February 22 of 2010, the bulk of a new set of legislations specifically made for the credit card industry is going to activate. It is called the Credit CARD Act and it is going to change the way teenagers access credit cards.

Teenage credit card holders have long been one of the most lucrative markets for credit card companies. Proof of this is the massive marketing credit card companies hold – or used to hold – during school openings to encourage teenagers to sign up for a credit card. Unfortunately, a lot of teenagers are not very well acquainted with the concept of financial responsibility resulting in an alarming rise in teenagers with large credit card debts. The trend greatly worried government regulators which is why a portion of the Credit CARD Act is specifically targeted at enforcing financial responsibility among teenage credit card holders.

How does the law do that? Simple, by keeping credit cards out of reach from teenagers who are not financially responsible.

Specifically, the new law will not allow credit card companies to sign up credit card holders who are below 21 years of age if they do not have the following requirements: a co-signer or proof that they have enough income to pay off their credit card bills.

Talking about co-signers, a co-signer is a person above 21 years of age who can vouch for the teenage credit card applicant. This is usually the parent or guardian of the applicant. Once the co-signer signs for a teenager’s credit card, he or she becomes liable for any charges and bills that the teenager does not pay. That should keep co-signers wary of signing for a teenager unless they are sure that he or she is financially responsible.

For teenagers who are already generating their own income, getting a credit card is a lot easier. All they have to do is to prove that they have the income to pay off their credit card debts. This requirement assumes that teenagers who are able to maintain regular income are responsible financially, which is a good bet to take.

What is unfortunate for teenagers with the new law is that credit cards are going to be much more difficult to get and getting one will most likely involve their parents looking over their shoulders – so to speak - whenever they make a credit card purchase. There are, of course, options available for teenagers who want the convenience of credit card payment but can’t get one such as debit cards or secured credit cards.

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