Credit cards shouldn't be withheld on basis of age
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Very few things are restricted to those older than 18: Why should spending money be one of them?
The new regulations laid out by the Credit CARD Act of 2009 will make raising interest rates and fees more challenging for the credit card companies. The new rules also will raise awareness to consumers about the costs of making only minimum payments.
But perhaps the most important change is the difficulty consumers under the age of 21 now will have when trying to acquire a credit card. Young adults no longer will be able to acquire a credit card without co-signers or the ability to prove they can pay the bills. Those under 21 must submit a written application proving they can pay back debts that must be “signed by a co-signer, including the parent, legal guardian, spouse or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account.”
This age restriction is the most unfortunate part of the new regulations. Mismanagement of credit cards happens because of inexperience and lack of knowledge, not always because one is young. There are responsible and knowledgeable 19-year-olds who use credit cards correctly, while a middle-aged adult might rack up mountains of debt. Although it’s true the average MSU student will leave school with about $2,700 in credit debt according to Brian Winters, a financial wellness consultant at Olin Health Center, it isn’t the government’s place to limit a student’s ability to use a card, especially on the basis of age.
These new regulations should put added pressure on schools, banks and adults to educate students on the impacts of credit. Credit affects future purchases for everyone, and understanding how to build it properly is a key component of modern life. Students need to realize credit cards might be useful in emergencies and financial crunches, but they are not free money. It’s also a good idea — and a more efficient one — to build credit other ways, such as paying cell phone and utility bills in students’ names.
Although it is a good business strategy for the banks, they should know better than to prey on college students with enticing credit card offers. The law will cut down on the free blanket, umbrella and backpack offers available for merely signing up for a card. Some regulations are needed on offers by banks along with ensuring the banks offer advice and guidance on proper credit management.
Any student who is considering applying for a credit card should understand the consequences of bad credit. To acquire a card, consumers should go into the bank, sit down with an expert and go through the responsibilities and details of credit and how it will affect them later in life. Many of the new regulations are going to benefit credit card users because they will help ensure consumers are more thoroughly educated about credit. It is important that college-aged students are well-informed of credit rules before potentially ruining their own credit for years to come, and it is good the government is at the forefront of the education.
The government is on the right track with these new regulations. Educating consumers is most important for maintaining good credit, and many of these regulations will benefit the individuals who don’t already have the information — but it shouldn’t be based on age.
Commentary
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REALITY
(02/22/10 8:22pm)Report
Yeah, they SHOULD. You should not be allowed to have a credit card unless you have a steady job with a yearly salary that is at LEAST 20 times the credit limit.
To think otherwise is financially irresponsible, and thinking like that is the reason that we are in this financial mess to begin with. Yeah, that’s right, I’m not one of the crackheads that blame Bush.
No job?
No credit card.
REALITY
(02/22/10 8:23pm)Report
OK, maybe 10 times the credit limit. I make 50K a year and have a single 5K credit card which I rarely use, but when I do, I pay it off within a month or so.
So yeah. Let’s say 10 times.
:D
mooshoo
(02/22/10 8:36pm)Report
As a 21 year old, I have had my credit card since I turned 18. While I do not make a steady income, I have paid all my bills in a timely manner and I use my card mainly to build my credit score. I know this is not indicative of the entire population of 18 year olds but for me it has been a valuable experience. 18 year olds are considered adults by the law and often lead independent lives following high school. How is one supposed to rent an apartment,buy a car,get a car without building a credit score? Just a thought.
Rick
(02/22/10 8:55pm)Report
According to the author, it is not the duty of the government to place limits on the ability of a student to use a credit card, especially on the basis of age. I both disagree and agree.
I believe it is in fact the job of the government to regulate certain conduct, particularly when that conduct poses a significant risk to self or others (see helmet laws, the federal drinking age, mandatory auto insurance and statutory rape legislation). For example, the federal drinking age was 21 throughout the post-prohibition era, until many states lowered it in the early 70s. However, research pointing to increased death rates tied to drinking amongst young adults prompted the feds to pass the Uniform Drinking Age Act in 1984, restoring the minimum legal drinking age to 21 across the country.
While I do not pretend to know the facts needed for an informed opinion, I am inclined to agree with the author that 21 years old is too high. To borrow an age old argument, if you are old enough to vote and die for your country …
Rick
(02/22/10 9:12pm)Report
Excellent points made above. I especially like the no job, no credit card point. Again, age alone is not likely the issue. I am hopeful that those who made the decision reviewed a great deal of data and found a pattern for those below a certain age. Perhaps someone can enlighten us.
Michael
(02/23/10 3:24am)Report
It is NOT A RIGHT to spend money you don’t have. If you want to buy something save money-how archaic right? Being in this age group I can still say that giving credit cards to ‘uncollateralized’ high risk consumers is simply irresponsible. The new legislation doesn’t prohibit this age group from getting credit cards, but rather ensures their credit isn’t unfounded. By requiring a cosigner the credit card companies are insured that the consumer will pay them (yeay!) Our age group ignorantly took out lines of credit that we couldn’t support. Then, lawmakers stepped in (and for once did something right) and said credit card companies were taking advantage of this age group and we were too stupid to know it. A student ranting about credit card companies becoming more responsible and being honest with consumers about what they can afford seems a bit ironic. This seems highly reminiscent or those declare your income mortgages. How did those turn our again?
About your credit score. . .
Get a cosigner for a card, or take out a small loan and pay it back if you’re are fiscally accountable as you think. No one would argue that having little credit is better than having $3,000 in debt.
To “mooshoo” above. . .
Having a credit card can indeed be learning experience for some, but so can having a savings account.
Be informed and don’t buy things you can’t afford. Sorry, but I think we’re forgetting this.
Todd
(02/23/10 9:01am)Report
Well, kiddies. How’s that hopey-changey thing you voted for working out?
You wanted a mommy state, you got it.
Re: Todd
(02/23/10 9:49am)Report
They’re still hopey and changey about the hopey and changey-ness.
That’s the beauty of the thing, when you don’t know what hope and change mean in the first place, it’s hard to disappoint. As long as you feed them some hopey-changey food here and there, in the form of speeches (with many instances of the words ‘hope’ and ‘change’) and maybe a press release now and again, they are pretty happy.
I think it’s time that we declared a hopey changey day.
In fact, no, lets declare EVERY day a hopey changey day!!!
Yay Hope! Yay Change! Yay for not knowing what Hope and Change are!!!
kev
(02/23/10 12:11pm)Report
i agree that ANY person of any age should be able to prove they can pay off a credit card…. bjut that’s just me…
Jim JOnes
(02/23/10 12:17pm)Report
Quick point..there is no FEDERAL DRINKING AGE..there is only state mandated drinking age limits. The Fed govt has no Constitutional authority to legislate drinking ages. What it does is say to the states, “Make the drinking age 21 or we’ll withhold Federal highway project dollars.”. It’s blackmail pure and simple, but the States are perfectly free to set whatever drinking age they want(of course, they will lose the Fed highway money).
Lena
(02/23/10 3:10pm)Report
The article starts out saying “Very few things are restricted to those older than 18: Why should spending money be one of them?” This introduction is completely misleading at best…credit card withholding is not the same thing as restricting spending. A student can spend just as much money as they want with or without a credit card. The only difference is, with a credit card you can spend money that isn’t yet yours. If you have no stream of income, how can you be expected to be able to pay back such money? A credit card is the same thing as a loan; if you want to take out a loan, you have to either have a co-signer or prove that you have a source of income/good line of credit. Getting a credit card is the same idea.
Normally I’m an advocate of less regulation, but this is a law that makes sense especially since there is an escape clause – if you have a steady stream of income i.e. a job you can prove that you have the ability to pay off your loans/debts you thus can get a credit card without parental permission.
Students without jobs shouldn’t have credit cards anyways. Having a credit card allows them to feed into the stupidity of, “I can spend this like cash and worry about the consequences later.” Obviously, this pattern of thought is not constrained to just 18-20 year-olds but it is undeniable that the 18-20 year old age range is the target for many credit card company advertisements (and most easily suckered into credit card debt). If you don’t have a job and you have to ask mom or dad for a credit card, it shouldn’t be that big of a deal.
To Jim Jones
(02/24/10 11:25am)Report
Your splitting hairs my friend. Lots of federal laws have that very same penalty for failure to comply, so call it what you want. It is a federal mandate that states cannot afford to ignore.
Re: Todd Ed
(03/01/10 4:44am)Report
So ReToddEd I wanted to let you and Palin know that the hopey changey thing is working out great. We are certainly glad we changed from Bush, who is the worst president in history. We are certainly glad we changed rules that made it easy to exploit and over use credit without the ability to pay for it.
I think it is appropriate to limit the credit people can have at a young age. There are ways for them to get credit but in order to do so you must show you can pay and have people willing to back you up. Go on any college campus and you can see how easy it is to get a credit card without even having an income.
Let us not forget that this recession was started by people who over extended themselves, so it is in all of our best interest to insure that doesn’t happen again.