In 2009, the Credit Card Reform Act of 2009 was signed into law giving consumers better protection against the practices of credit card companies. It was passed in view of the problems that have arisen from the unfair credit practices by many credit companies leading to indebtedness by many consumers.
One of the features of the Credit Card Reform Act of 2009 is the special protection given to young consumers such as the college students. Studies say that the average college graduate has almost $20,000 in debt and that the average credit card debt has increased 47% between 1989 and 2004 for those between 25 to 34 years old and 11% for 18 to 24. (Ben Woolsey and Matt Schulz citing Demos.org, 2010, p.1)
Under the said law, banks and other credit card companies can only offer credit to people under the age of 21 if the applicant proves that he or she can pay the debt for the use of the card. As a result many applications for credit cards have been declined by credit card companies.
In the news article How teenagers can get, manage a credit card, teenagers who want to get a credit card has three options:
1. You can ask your parent. You can go to your parents and ask them to co-sign on a new credit card for you. It makes your parents liable for any obligations your incur in the use of the credit card.
2. You can get a job with a better income. Banks and credit card companies want to make sure that you can pay. Getting a job assures them of a source of repayment.
3. Use your deposit account with the Bank as guaranty to secure your credit line. Banks only want to make sure that they get paid. Opening a deposit account and using it as a security will help convince them that you can pay for your use of the credit card.
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