Banking Industry Implements Regulations For Student Credit Cards

Banking Industry Implements Regulations For Student Credit Cards

2/14/2011

The recent changes implemented by the banking industry have made it more difficult for students to secure their own credit cards. Despite the safeguards that were put in place, however, some teenagers are discovering ways on how to get around this new law.

The problem is that what the students are doing just to secure a credit card can potentially ruin their credit, as well as the credit of their friends. When this happens, their poor credit rating can haunt them when they graduate, particularly when they try to buy a home, or a car, or even when just trying to get a job.

The reason why most students finds it hard to get a credit card is because of the federal Credit CARD Act, which restricts anyone below the age of 21 from getting a card. The law has several exemptions, though, with one stating that those below 21 years old could get a credit card provided they have someone over 21 years old to cosign for it.

Another exemption is to the general rule is if those below 21 years of age has sufficient proof that they have a source of income.

Nevertheless, experts say that there are some college students who are discovering loopholes and finding ways on how to get around the law.

John Ulzheimer, the president of consumer education, Credit.com, said, “One of the ways that we’ve seen college kids do this, and it’s actually quite clever, is they’re actually finding classmates who are in fact over 21 and do qualify under the CARD Act rules to cosign for them.”

Another option that students take is business credit card. These types of credit cards have no age restrictions. Practically anyone can apply without even the need to prove that they have a business.

WRITTEN BY:

blakeh@wellsdrew.com