For many college students just trying to free from credit card debt is a difficult task, yet there is a new piece of legislation that may help alleviate this serious issue.
Just a month ago, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act into law. It was meant to reduce the fees associated with credit cards and put limits on how high interest rates can go. What may not be so well known is that this law includes an additional provision that is aimed at advancing the financial responsibility and reducing debt among younger, college-age people.
Starting in February 2010, those seeking to apply for credit cards that are under the 21 must prove they have adequate financial independence to manage debt or they must provide the signature of a guardian or parent who is willing to stand in as a co-signer.
The major culprit in student age credit card debt is the “buy now, pay now” marketing schemes that snare so many into a life-long pattern of debt.
There are alternatives being explored as well. Some students have chosen to let their parents take the responsibility for the credit card debt. Others are seeking out and applying for prepaid, reloadable cards. These card are not issued by financial institutions nor do they carry a line of credit. They are basically debit cards that are not linked to a bank account. They include features like direct deposit and ATM accessibility.
They function as mobile bank account. As the new credit card truly begins to take hold, such pre-paid cards may become a more popular option for the nearly 20 million college students in the U.S.
Other students may simply attempt to conserve their money and exercise frugality by limiting how much money they use on a weekly basis. They bypass the credit card entirely.
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