Getting free from credit card debt is a difficult task for many college students, but the good news is that there is a new piece of legislation that may help lighten this serious issue.
President Obama has signed the Credit Card Accountability Responsibility and Disclosure Act into law just a month ago. This Act is meant to reduce the fees associated with credit cards and put a limit on how high interest rates can go.
New Provision in Law For Students
Many people don’t know about it, but this law includes an additional provision that is meant to enhance the financial responsibility and help reduce debt among younger, college-age people.
With effect from February 2010, youngsters or college going students who are under 21 years, and want to apply for credit cards must prove that they have adequate financial independence to manage debt or they must provide the signature of a guardian or parent who is willing to sign as a co-signer.
Alternatives are also available
Although the provision has been made, but the students are seeking other alternatives too. Some have chosen to ask their parents to co-sign for them, while others are seeking out and applying for prepaid, re-loadable cards.
Financial institutions do not issue such cards nor do they carry a line of credit. They are basically debit cards that are not linked to a bank account. They have features like direct deposit and ATM accessibility where you can use the cash you deposited with no debt being involved.
Such pre-paid cards may become the most popular option for the nearly 20 million college students in the U.S. who want to get a credit card but will be unable to do so with effect from 2010.
Other students may simply try to save their money and spend responsibly by limiting how much money they use on a weekly basis. This way they can forgo having a credit card entirely.
