The following is a guest post on student credit card debt and an excerpt from Completely Conquer Credit, which is now available on Amazon for Kindle.
There’s a lot that college students don’t know about credit cards. Truthfully, I lost focus many times in college with all of the parties and fun stuff going on. At the end of the day, you should not have a problem finishing college without credit card debt. I’m here to help you.
Today I wanted to throw out a few facts about the new credit regulations that were brought to us by the Credit Card Act of 2009.
If you’re under 21, you’re going to have to either prove your income or find a cosigner.
No longer can those without a job be given access to a couple of hundred dollars just by signing a few papers. Thankfully, those credit card scams have been halted. You need to prove that you have an income so that you can be given access to credit. Makes sense to me. How were those people planning on paying back the money they borrowed without any cash coming in?
If you can’t prove your income but want a credit card just to start building your credit history, you’re going to have to bother one of your relatives or anyone else that you can find to cosign for you. You better be nice to them for the next week or buy them a coffee next time you see them.
College students can no longer be taken advantage of.
The new law doesn’t allow credit card marketers to solicit their products on the college campus. The company is also not allowed to offer a “free gift” as a bonus for signing up for a credit card.
In the past, credit card companies were known for setting up their booths right on campus where freshmen would be forced to take notice. Just to entice students to sign up for a credit card they usually offered a “free gift” in the form of a Frisbee or a school shirt.
You’re now informed of how long it will take you to pay off your credit card balance while making just the minimum payment.
When I received my first ever credit card statement I was ecstatic to find out that I only had to pay a minimum payment of $20. I thought that this was such a great deal. I borrowed so much money and I only had to pay back a small portion of it. I brought this up to one of my professors in college. Then I was shocked when I found out that this payment usually just covers the interest.
Credit card companies can no longer blatantly rip us off.
Generally speaking, we’re now safer as credit card users. The company needs to warn us ahead of time before increasing the APR on our card. This is excellent because there have been too many horror stories of honest people getting hit with an absurd interest hike out of the blue. It’s also easier to dispute credit card charges if a problem comes up.
With all of that being said, by now most companies have found a few ways around this act with certain loopholes.
According to Dave Ramsey, a number of interesting loopholes have been observed. Here are a few of the loopholes that the credit card companies have managed to pull off since the act has been introduced:
- Credit card companies will not market “on campus.” They will, however, set up booths in common areas right off campus where college students are bound to see them. The definition of “campus” has been blurred.
- Some students have gotten away with listing their student loan debt as income. I don’t even want to start my rant on this one.
- When it comes to gifts, you may not get a t-shirt any longer, but they’ll offer you an “account credit” to entice you to sign up. That $50 signing bonus can be a nice little incentive when you’re already in the market for a credit card. If you’re clueless about how credit works, that $50 is just a way for the company to hook you in.
The overall issue with credit cards is still the same regardless of government regulations or any studies that are released. Just because you warn people of the inherent risks, it doesn’t mean that it’ll deter poor behavior. Cigarette companies have been forced to mention disgusting facts on their packages about how you might get lung cancer or how smoking can lead to erectile difficulties, and I still see people smoking everywhere. I just hope that you walk away from this piece knowing where you stand with credit card regulations.