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New 2010 Credit Card Bill Will Affect Student Applicants
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At age 18, Americans become eligible to vote, enter the military, serve on a jury, and marry without parental consent, in most states. But starting in February 2010, there will be one allowance fewer with that milestone: a credit card. On May 22, President Obama signed into law the Credit CARD Act of 2009, a bill that restricts credit card issuers from raising interest rates without warning, penalizing customers who pay on time, and levying excessive fees. There's also a provision that specifically concerns young people: Under the new law, no one under age 21 can get a credit card unless a parent, guardian, or spouse is willing to cosign or unless the underage person has proof of sufficient income to cover the credit obligations.
One of the most contentious issues is the role of the cosigner. In the eyes of the bill's supporters, the requirement that a parent must cosign is exactly the kind of help young Americans need to start making better financial choices. "What I like [about the bill] is that it will protect the uneducated—the naive who have not been exposed to the basics of good use of credit," says Mary Ann Campbell, a certified financial planner who teaches a consumer finance course at the University of Central Arkansas. Campbell points out that credit card companies will issue cards only to those with parents or guardians with good credit histories, so there will be an additional layer of authority to make sure inexperience does not lead to massive debt for underage people who have a parent or guardian cosign. Other experts aren't so sure that the bill will really encourage more responsibility. "There's no evidence that someone manages credit cards better at 21 than 18," says John Ulzheimer, president of consumer education for Credit.com.
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Ahorre June 3, 2009 08:39 AM