‘CARD’ Law Protects Under-Aged from Ramping-Up Credit Card Debt

Today, and with the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) financial outlets like Bank of America or any bank who want to hawk their credit cards to anyone below the age of 21 need good reason to show up at events or campuses with ‘gifts’ in hand.
A recent Seattle Times article, “Students, think of credit cards same as cash,” by Ginny Frizzi, Creators.com, points to past years as the reason why the CARD law was passed: students fan up huge credit card debt with little income to repay.

“The results often proved disastrous…running up credit cards to the limit. Unable to make the monthly payments, they ended up with a poor credit score that followed them into the future,” noted Frizzi.

The law also requires underage students to have a co-signer when they apply for a credit card. That makes it tough for the co-signer who becomes responsible for the debt if the student defaults on payments.

If ‘co-signing’ is just not in the cards, for example, a parent can simply have another credit card issued to the student from the parent’s account. In this case, it is important that those expectations on use of the card are made clear and the consequences also pointed out.

“I made sure the ground rules were clear—the card was to be sued for certain types of purchases and for a maximum value each month. Otherwise, the money would come out of his savings account,” commented Mitchell Weiss, adjunct faculty member in the University of Hartford’s Barney School of Business.

Still, another method of issuing ‘credit’ to a student is through a secured credit card. A cash security deposit is used to cover the charges. The limit on the card is set by the card issuer.

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