By: Bill Waters - Staff Writer
Published: Jun 11, 2021

Credit Card Act and College Students

Did you hear about the Credit Card Act and college students? It started on February 22, 2010, and it changes everything about marketing. It’s also a whole new ballgame for the under-21 set.

There are major provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act, that went into effect. Signed into law on May 22, 2009, it mandates a number of reforms for the credit card industry, such as limiting when banks and other issuers can increase annual percentage rates (APRs) and giving cardholders more time to pay their monthly credit card bills.

The law also includes several measures aimed at protecting young consumers and college students, who until now have been bombarded with offers of easy credit.

“Young people thrown on college campuses can be extremely vulnerable to these practices,” says Brad Lazarus, principal at Omega Advisors, a Chicago financial planning firm.

So what are the changes? Here’s a breakdown:

Higher barriers to credit approval. The days when jobless students could get credit cards without Mom and Dad’s approval are over. Student applicants under 21 will now be required to have co-signers, such as parents or other adults over the age of 21, who will take on joint liability for any card debts that are incurred.

No more freebies. Currently, some credit card companies offer students token gifts, pizza or free meals just for applying. But now that has changed. This practice is now against the law near college campuses.

Fewer prescreened offers. Under the new law, credit reporting agencies, such as Experian, Equifax and TransUnion, cannot provide the credit reports of under-21 consumers to credit card companies unless the consumer specifically requests that they do so. This will keep young people from receiving those preapproved offers for student credit cards in the mail as part of the Act.

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