The Credit Card Accountability Responsibility and Disclosure Act is a new law that comes into effect on February 22, 2010. This law changes certain rules and conditions about credit cards obtaining to teenagers below 21 years of age. It has been estimated that an average College student carries a debt of $3000 on their credit card. A steady is also estimated that some freshman students and College graduates will end up with more than $8000 on the credit card when they leave college.
Here are the certain rules and regulations that have been brought about by the Credit Card Accountability Responsibility and Disclosure Act Of 2010.
No Approval over Telephone
This rule means that a credit card cannot be approved for a person under the age of 21 over the telephone. Everyone under the age of 21 must write a written application for a credit card.
Teenagers Must Prove Income or Have a Cosigner
Not only do teenage is required to put an application for a credit card in writing but they must also present proof of income or have a cosigner who is offered legally adult age above 21 and someone who can take responsibility for making the payment on the credit card on the behalf of the teenager. Such a cosigner can be a parent, guardian, spouse, aunt, cousin etc.
The credit card issuers are required to take a written approval from a cosigner on the credit card that has been co-signed. This allows a cosigner is to lower the credit limit to prevent high balances.
Restrictions on Campus Credit Card Marketing
Credit card companies are known to target fresh College students for their credit cards by advertising and marketing themselves on a close to college campuses. Credit card companies love to recruit new student is as their customers is not only do they stand the chance to win a loyal customer for a lifetime but also consider them to be safe risk since parents usually stand behind their debts.
They use naive yet simple practices such as offering T-shirts, sandwiches and simple free gifts in order to make the College students signed the credit card application.
The new credit card rules make this practice illegal. Credit card companies cannot offer any tangible item to entice students to apply for credit cards on the campus, near campus or at a College related or College sponsored event. Credit card companies are also not allowed to send preapproved credit card offers to consumers under the age of 21 unless the person has opted to see these offers.