Monopoly Money

The CARD Act will rightfully tighten the reins on student credit cards.

Once 18, newly minted adults begin to receive an automatic flow of mail, letting them know they can legally apply for a credit card. But, once the Credit Card Accountability, Responsibility and Disclosure Act goes into effect Feb. 22, the transition to adulthood will no longer be a quick transaction.

The CARD Act will make it more difficult for adults ages 18 to 21 to get a credit card by requiring an adult co-signer, who will be held responsible if the user does not make payments.

Despite all the restrictions the CARD Act introduces, such as requiring credit card companies to be clearer about the payment minimums attached to having a credit card, the co-signer revision for young adults will undoubtedly have the most effect on college-aged students.

While the act may seem restrictive – at 18, we are adults – students should be grateful someone other than their parents are looking after them, especially when the banking industry has been so quick to reel in young clientele.

In February 2007, Bank of America introduced its Student Visa Platinum Plus Credit Card, available to students to help build their credit while making a myriad of necessary purchases, such as “books for class, value-size packages of instant ramen noodles or perhaps even new clothes during the occasional shopping expedition,” according to the press release. Any student, 18 or older, enrolled in an accredited two- or four-year college or university was eligible.

But neither Bank of America nor Visa are lone culprits. MasterCard, among other credit card companies, offers three types of student credit cards, and let’s not forget about the not-so-innocent victim, the student.

A 2009 study by Sallie Mae reported that 84 percent of undergraduates have at least one credit card – half of college students had four or more – and the average credit card debt for students is $3,173. More importantly, 84 percent of the students surveyed said “they needed more education on financial management topics.”

At 18, students attending a higher learning institution are adults, but they know little about the piece of plastic imprinted with their names in silver lettering. Students may be spending out of necessity, but when credit cards didn’t exist, people were forced to find alternatives.

And, for responsible students who know how to handle a credit card, finding a co-signer is a small obstacle. Regardless, the CARD Act is imperative, especially when students are paying credit card bills off with student loan money, which is essentially spending what they don’t have, twice.