The first wave of freshmen affected by the new credit card reform act are beginning college this month, leading experts to wonder how successful the law will turn out to be.
Under the new laws, if you are under 21 and want a credit card, you must either provide proof of income or get a co-signer who’s 21 or older. The law is aimed at preventing students from graduating with thousands of dollars in credit card debt, which in recent years has almost become the norm.
Credit card companies are now restricted from marketing credit cards within 1,000 feet of a college campus, which includes events that are related to the college. Gone are the days of free t-shirts when filling out credit card applications – credit card companies are now forbidden from offering tangible gifts to college student. However, credit card companies will still be allowed to offer airline miles, reward points, and other intangible goodies to lure students.
Some experts are doubtful that the credit card reform laws related to college students will be entirely successful. Many parents will likely be willing to co-sign for a credit card in order to help their children build credit responsibly. Some students who want cards may be able to entice their older friends to cosign. Some doubt that credit card companies will strictly abide by the rules.
For parents who are unsure about whether they should co-sign for their children or not, there are alternatives, such as prepaid debit cards or allowing their children to become authorized users on the parents’ cards.