New law to change college students' access to credit cards

Tools

Story Published: Oct 2, 2009 at 7:59 AM PST

By Connie Thompson

Video

College students are prime targets for banks and credit card companies looking for new customers. Students want credit cards, and they use them.

One recent survey finds the average undergrad credit card balance is more than $3,000. The penalty for a missed payment is increased interest rates as high as 35 percent.

And while the days of blanketing campuses with free CDs and T-shirts are gone, credit card companies are having no trouble finding potential college-age customers in the mail.

New laws passed by Congress will soon change that.

Under the new credit card bill, starting in February banks and credit card companies can no longer offer free incentives to get students to apply for a card.

A parent or adult will either have to co-sign for any applicant under 21 years old, or the student will have to show proof of their ability to pay the credit card debt on their own. The limit would be 20 percent of the student's income.

Reaction on campus is mixed.

"That's kind of weird." said 20-year-old University of Washington student Spencer Rich. "I like it the way it's set up now, where, you know, you kind of teach yourself responsibility with money."

" It's a great idea to crack down." said 18-year-old Thai Nguyen. "Because I always hear people's stories when they mess up on their credit scores and things like this happen, because things get out of control and it takes a long time to fix it."

But with the new law still four months away, this is open season. Every student on every campus is fair game.

Check Your Credit Record

While most students have clearly gotten the message that having a credit card is a way to start building a credit score, most have never checked their credit record.

Even if they don't have a credit card, every college student should get a free copy of their credit record through www.AnnualCreditReport.com. Only use that Web site.

Some students are finding identity theft that started when they were young children.

And some are discovering active credit card accounts they forgot they applied for in the barrage of heavy marketing.

For more information:

Free Annual Credit Reports

Credit Card Reform

Current Weather

Current Temp 43.0 °F

Fair

Video

More Weather

Current Weather

More Weather

Upload directly from your mobile device.

Learn how

YouNews

This content requires the latest Adobe Flash Player and a browser with JavaScript enabled. Click here for a free download of the latest Adobe Flash Player.