Despite inconvenience, students benefit from credit card act

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For family community services senior Carolyn McLean, obtaining a credit card was simple.

After receiving notification from Michigan State University Federal Credit Union, or MSUFCU, stating that she qualified for a credit card, McLean went to MSUFCU’s Union branch, filled out some paperwork and walked out with a credit card.

“They actually kind of threw it at me,” McLean said. “It was really easy.”

Once approved, McLean said she proceeded to use her card frivolously, purchasing more than just the necessities. Eventually her purchases added up to what she described as a good deal of credit card debt.

In order to prevent situations such as McLean’s, in May 2009, a law was passed limiting the marketing of credit cards to college undergraduates.

The Credit Card Accountability Responsibility and Disclosure Act of 2009, or Credit CARD Act, increased restrictions for people 18-21 applying for a credit card, requiring them to either provide proof that they will be able to pay back the money charge or get someone to co-sign for them.

McLean said she thought a credit card would be a convenient way to pay for her things.

“It looked like free money, I guess, at that age,” McLean said.

Pamela Boyce, specialist and personal finance instructor, said the law was created to protect people, especially students, from overextending themselves financially.

“It’s a protection act so that (students) don’t graduate with, not only student loan debt, but credit card debt,” Boyce said.

A survey recently released by the Federal Reserve showed the Credit CARD Act had been successful and the number of credit cards issued through universities to students had declined.

According to the survey, the number of credit cards issued through universities fell 17 percent from last year.

April Clobes, executive vice president for MSUFCU, said the credit union has experienced about a 20-25 percent decline in credit cards issued since the law was implemented.

Although the law makes it more difficult for students to obtain a credit card, MSUFCU still tries to make cards available to students who need them and are able to use them responsibly, Clobes said.

Boyce said it is important for responsible students to be able to obtain a credit card because without one, they will have trouble building their credit history, which can affect them later on in life.

A lack of credit history made getting approved for a credit card a difficult process for MSU alumnus Brett Stowell.

Stowell recently applied for a credit card at two different banks, and was rejected by both.

He said his lack of credit history most likely was the reason he was rejected.

After being rejected, Stowell applied at the his parent’s bank where he previously had been a member.

After about two weeks, Stowell received the card he had been waiting for.

Stowell said being a member of the bank previously helped him obtain his credit card because employees knew him and his financial history.

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