The Associated Press noted how the new credit card regulations will impact students (also see this CNN Money article which also focuses on the difficulty that many young adults will now face in getting credit):
NOW: Credit cards may no longer be issued to anyone under age 21, unless the applicant has a co-signer, or can show independent means to repay the debt. Colleges must disclose any marketing deals they make with credit card companies. Banks are not allowed to hand out gifts on or near campuses or at college-related events."
On the subject of students and credit cards, the NY Times blog Bucks asks the question "Should College Students Have Credit Cards?"
Here is an earlier SLA post on the pros/cons of tightening up credit card eligibility for those under 21 years of age.
- Student can apply with an adult cosigner
- Student can be an authorized user on an account. They are not legally responsible for paying on the account and from a credit scoring perspective can benefit (or suffer) based on the payment history of the authorized user.
- Open checking account with debit card
- Consider prepaid cards
Here are some articles that discuss the broader ramifications of the new credit card regulations:
The Wall Street Journal had these caveats for credit card holders:
Expect rates to go up, as they already have in 2009:
"The biggest new tactic may be one of the oldest: raising rates. As long as credit-card companies inform you ahead of time and don't make any sudden rate changes, they are mostly free under the law to charge whatever they want. They can raise the rate on new purchases made as long as they provide 45 days notice that they are doing so.
U.S. banks on average increased the interest rate on their credit cards by about two percentage points between December 2008 and July 2009, according to Pew Charitable Trusts, a nonprofit group. Some consumers say that their accounts have been hit with sudden interest-rate increases even if they haven't been late on a payment."
- More credit cards will shift customers to variable rate cards:
- Fees are also likely to rise:
- Rule of thumb if you plan to consolidate your credit cards:
USA Today summarizes how consumers may be affected by the new legislation. Here were a few points they made:
- Credit card issuers cannot raise interest rates on existing balances
- Expectation: "The prohibition on retroactive rate increases means credit card companies "are going to be more aggressive at changing rates on future purchases, and rates in general for new accounts are going to be higher than they were," says Ben Woolsey, director of consumer research for CreditCards.com.
- Exceptions to this rule
- Variable-rate card and index (e.g., Prime Rate) changes
- "Teaser" rate expires
- More than 60 days late on monthly payment
- This was the message that greeted me on my February statement (YIKES!): "If we do not receive your minimum payment by the date listed above, you may have to pay up to a $39.00 late fee and your APRs will be subject to increase to a maximum Penalty APR of 29.99%."
- Credit card issuers can't charge a fee when you exceed your credit limit, unless you sign up for that service
- Expectation: "Credit card issuers will still be allowed to charge annual fees, inactivity fees and other types of fees, Woolsey says. And an increase in those types of fees is a certainty, says John Ulzheimer, president of consumer education for Credit.com.