Parents Rejoice, Financial Responsibility Now A Must For Teenage Credit Cards
Consumers are going to find a lot to be happy for with the new Credit CARD Act. Consumers who are parents are going to find even more. With the new Credit CARD Act, regulators made special effort in introducing legislations meant to protect teenage credit card holders.
Government regulators have been worried over the high amount of debt among teenage credit card holders which are commonly composed of college students. Credit card companies market credit cards to students heavily, knowing that a lot of them are not very well versed with managing their credit responsible and that, when payments go overdue, their parents are likely to step. This has made for lucrative business for credit card holders while giving many parents with debt ridden students a considerable headache.
With the new regulations, credit card companies can no longer market their credit cards to students as aggressively as they used to. Without the law, credit card companies could easily set up booths in campus and offer t-shirts and other freebies in exchange for a credit card application. With the law, that is no longer allowed. Credit card companies will have to market their credit cards somewhere else. Besides, credit card approval for applicants below 21 years old is also going to get a lot tougher.
The new credit card legislation dictates that, for a person under 21 years of age to qualify for a credit card, he or she must either prove to have a reliable and appropriate income to cover any credit card debts or he or she must have a co-signer for his or her application.
Parents are usually going to be the ones who will be doing the co-signing for when a student applies for a credit card. This gives them a lot more control over their children’s credit card usage than previously. With this in place, parents can prevent their children from getting into credit card debt by not letting them have a credit card in the first place.
Of course, parents must realize that teenagers will have to learn how to responsibly handle their finances sooner or later. While credit cards do provide a good way to do so, the risk of getting into serious debt is just too high. It will be up to the parents to find a way for their teenagers to learn how to handle money without getting into debt and this is of utmost importance as fiscal responsibility is one life skill that cannot be simply taught in the classroom but must be learned from life experience.
