Under-21 Face New Credit-Card Restrictions

Students looking to add a shiny new card to their wallets will have to start buttering up their parents. The Credit Card Responsibility and Disclosure Act, effective Feb. 21, has placed new restrictions on credit-card companies, including a provision that requires all those under 21 to have a co-signer when opening a new line of credit.

The federal legislation aims to prevent credit-card companies from exploiting consumers. According to Gregory Cendana, president of the United States Students Association, the act is a step toward much-needed credit-card reform.

Cedana said the act prohibits credit-card companies from offering gifts to students under 21 for opening up credit-card accounts, preventing exploitation.

“CitiBank or other companies would visit campus and say, ‘Hey, if you open a credit card we’ll give you a T-shirt or pizza,’” Cendana said.

In addition, credit-card companies can no longer send students under 21 pre-screened credit cards. Previously, credit-card companies could issue ready-to-use cards to potential clients by mail, eliminating the application process.

According to Cendana, pre-screened cards take advantage of students because students are less familiar with the system and more likely to accept without being aware of the details.

“We found that a lot of companies have also been doing targeted mailings to lots of students, and it ends up being overwhelming,” Cendana said. “We feel that there could potentially be other ways to fund schooling before taking out credit cards.”

The final restriction requires that customers under 21 have a co-signer — typically a parent — when opening a new credit line, unless they have proof of adequate income. This is meant to protect students from recklessly spending themselves into debt.

“I do think it’s a good step,” Revelle College freshman Joanna Lee said. “It will help students be more responsible and less carefree. There won’t just be some plastic to use to spend.”

Cendana said the government should continue to put additional restrictions on credit cards.

“It takes small steps towards reform, but there’s larger financial reform that needs to be addressed,” Cendana said.

Readers can contact Ayelet Bitton at [email protected].

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