College Credit Card Legislation

Posted by Naomi Rockler-Gladen Oct 9, 2007

The U.S. Congress is considering legislation that will limit the ability of credit card companies to offer credit cards to students who have little or no income. Why?

If you've attended a college campus at any time in the last few decades, you've probably seen been deluged by dozens upon dozens of credit card applications. Students are a favorite target market for credit card companies, and corporations are often willing to give students credit even if they don't have an income. The results? Many students use their new credit cards responsibly, which allows them to build up a good credit rating that will make it easier for them to buy things like cars and houses years from now.

Unfortunately, many student don't know enough about credit and do not use the cards wisely, and they wind up starting out their working lives with huge amounts of credit card debt at high interest rates. With such heavy debts, students find themselves able to make small payments, which means more and more debt as the years go by. They also incur late charges, which are costly. To make matters worse, some credit card companies practice something called "universal default," which means that if a student is late on a payment for another bill of any kind, the credit card can raise the student's interest rate to a very high amount.

Needless to say, credit cards make a fortune off of the irresponsibility and financial hardships of young people. Congress is trying to do something about this, thank goodness, by outlawing practices such as universal default and making it more difficult for a student to receive credit, especially if they have little or no income.

Read more about college students and credit cards.