Funny Money

As a college student, it is difficult to ignore the dozens of credit card companies that contact you you regarding opening a credit card. It is definitely a confusing thing to navigate: each credit card has different perks and it is difficult to figure out which is best for you. And on top of that, deciding whether or not to open a credit card in your name and begin your own line of credit is a monumental decision.

Soon, this may all change.

New laws are being passed that are designed to curb the flooding of credit cards on college campuses, making it harder for students to open credit cards in their own name. Last May, Congress passed a law making it harder for card companies to raise interest rates unless that cardholder was at least two months late in paying a bill. But more interestingly, the new changes will greater affect those who are under 21. Students will no longer be able to sign themselves up for a credit card and receive the (ever popular) promotional t-shirt or teddy bear.

This law appears to be a double edge sword. Students generally tend to accumulate high credit card bills and procure large debts. But at the same time, many students rely on credit card to purchase books, pay club dues and simply thrive on campus. With the current economic situation, credit card companies are weary about students being able to pay off their payments on time, if at all.

So what if your parents co-sign? It may not be so simple. Having a co-signer means that person is putting their credit score on the line so that you may begin your own. If you cannot get a co-signer, then students will need to be able to show that they are financially able to pay off their bills. And even still, credit card companies are becoming more conservative in who they will allow to open accounts. In states like New York, for example, it is illegal to market credit card on college campuses. In Texas, if a credit card company wants to market on a campus, it is required to provide financial literacy information.

Graduating college is about finding and accepting your independence. It means looking for a job, potentially moving to a new city and relying less on your parents. These new credit laws make it much harder for students to do just this. As a second semester senior, I realize that now is the time to begin building my own credit and making small purchases that I can pay off on time. If these new laws are enacted, it will be much harder for me to make small, independant changes in my life. This means that I will have to rely on my parents for even more, like co-signing an apartment or car lease.

There should be other criteria for gauging whether or not a student is capable of opening and handling their own credit cards. Many students have lived in foreign countries, held multiple jobs or internships and lead completely independent lives. I think that credit card companies should consider these other criteria when deciding if a student is a sound candidate. If they won't allow us to attempt financial independence, when are we supposed to learn it?


For the full article, click here: http://http://money.cnn.com/2010/02/19/news/economy/student_credit_cards/index.htm