News & Updates From Generation Y

Crashing The College Credit Card Party

In Millennial Matters on February 3, 2010 at 8:26 PM

It’s no secret that college students struggle with credit card debt, but the new Credit Card Act of 2009 could potentially end some of their poor plastic-swiping practices.

Effective February 22, 2010, the law will prevent those under the age of 21 from obtaining credit cards unless they are able to show proof of sufficient income or have an adult co-sign on their account. The law also bans companies from offering “freebies” if students sign up for credit cards on/near campus or at college-sponsored events. (“Near campus” is considered to be within 1,000 feet of the school’s border.)

Some think the new law is a positive step in reducing the debt accumulated by college students. (A recent Sallie Mae survey found that the average amount of debt carried by college cardholders is $3,173, and the average number of cards held per student is 4.6.)

Bill Hardekopf, the chief executive officer of LowCards.com, told Bankrate that it has been far too easy for young people to obtain credit cards.

“Just the fact that the average college student has 4.6 credit cards,” said Hardekopf. “I don’t have 4.6 credit cards. Why do you need 4.6 credit cards?”

(Read: 8 Major Benefits Of New Credit Card Law)

While the amount of debt and the number of credit cards carried by college students are likely to be reduced under the Credit Card Act of 2009, some students and professors feel that the new law is a poor solution to the overall problem.

“Its more government interference,” said Ohio State junior Edward Wells. “It’s something they don’t need to be interfering in.”

“It’s my money so I should spend it how I want to. I shouldn’t need my parents to co-sign it and be able to see every cent that I spend,” said Ohio State freshman Sherrie Kessler.

Jonathan Fox, a personal finance professor at Ohio State, thinks it is irresponsible to give college students lower expectations regarding financial matters.

“While I think it’s loaded with good intentions, it’s concerning to me that we’re going to have special treatment for these adults who really need to be learning about personal finances by using the key tools of personal finance,” said Fox. Fox thinks the bar should be raised for students, not lowered.

Regardless of how students and college administrators feel about the Credit Card Act of 2009, the new law is set to take effect later this month.

I don’t know about you, but I’m pretty interested to see if (and how) it changes the spending habits of young adults in the near future and later on down the road.

(Read: A Comprehensive Guide To The Credit Card Act Of 2009)

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