August 18, 2010
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News: A Noticeable Difference On Campus
Students will notice a difference on campus this fall as they begin a new school year. Unlike previous years, campus will be void of aggressive marketing campaigns of credit card companies looking to capture new customers for future loyalty business. New legislation prohibits lenders from preying on the vulnerabilities of young college and trade school students who might often find themselves short on cash. Statistics have shown that the average credit card debt for college students is nearly $4,000. According to a recent study by Sallie Mae, approximately 84 percent of college and university students are carrying a credit card. These numbers indicate that a large portion of our nation's young adults begin their new life after graduation tied to mounting debt.
The crisis forced federal lawmakers into protecting students by including provisions to protect individuals under the age of 21 in the new Credit CARD Act 2009. Not only are lenders no longer allowed to set up tables at on-campus school events, but individuals under the age of 21 must now have a co-signer to obtain a credit card. Lenders have added additional limitations which include lowering credit limits and show that they have the means and ability to repay the debt.
Several financial institutions have designed new credit card programs geared especially toward young people and aimed at helping to teach financial responsibility. Many of the cards have a reward system attached as an added incentive to repay debt as agreed. To make it even more rewarding, most have no annual fee. Students are advised to examine the terms and conditions of all their choices before rushing into getting any particular card. Parents should be involved in the decision making process; however, it is best if the student be placed accountable for investigating each card. Parents should also discuss the alternatives which include prepaid cards or debit cards which also provide reward incentives. Prepaid cards are an excellent way for students to establish credit.