Many students unaware, feel unaffected by CARD act intended to protect from credit problems
The last thing most students look forward to leaving Central Michigan University with is major credit card debt.
Legislation known as the CARD Act that went into effect Feb. 22, 2010, was intended to give students protection from potentially exploitive practices by credit card companies.
Shelby Township sophomore Christopher Burch recently applied for a JC Penny thinking it was a store rewards card.
“Once I realized it was a credit card I paid it off immediately, establishing and building credit now isn’t a bad idea,” Burch said.
He said he was unaware of the CARD act and had received no notifications about it.
According to www.credit.com, the purpose of the CARD act was to get credit card issuers to provide clear disclosure of account terms before a borrower opens an account. If the account provides a promotional interest rate period, the promotional interest rate will have to last a minimum of six months. Credit card companies will also not be able to increase interest rates on existing credit card balances unless the borrower is at least 60 days late on the account.
The legislation mandated credit card companies notify card owners 45 days before they increase interest rates or change fees. The act was put in place to give card holders options to cancel their accounts or prioritize payments.
The CARD Act’s provisions that impact students took effect in February of last year and were aimed at curbing practices that lured students in with freebies, and in some cases, left them with big credit card debt when they left school.
Associate Economics Professor Jason Taylor said he believes credit and being able to borrow money is a positive thing for students.
“There are so many opportunities that wouldn’t be open to students without credit cards," Taylor said. "School would be impossible for some students to pay for."
The legislation stipulated anyone under the age of 21 could not obtain a credit card without sufficient income. Some still managed to obtain cards by having a parent co-sign or becoming an authorized user of a parent's credit card.
“We tend to let (credit card companies) make our choices for us," said Associate Economics Professor James Irwin. "My younger children get offers for credit cards and they aren’t even of age. I could see how this could pose a problem."
Taylor said people students should not be given too many limits from the government to avoid responsibility.
Ages 18 or 19 would be most ideal to start establishing credit, Burch said.
“Once you turn 18 you are able to vote, join the military and should be able to have your own credit card,” Taylor said.
