College campuses have been a prime breeding ground for credit card companies to lure in their new victims.
Campuses are filled with fresh, newly independent young adults who are eager to explore their newfound freedom from parents, home and finances.
This innocent exploration is exactly what leads to debt on top of debt on top of even more debt.
However, a new credit card act will appeal largely to college students.
“For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs,” said President Barack Obama in a press release on Monday. “But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable.”
The Credit Card Accountability, Responsibility and Disclosure (CARD) Act went into full effect Monday after having some rules of the act in effect for months now.
The provisions of the act are intended to protect consumers from unfair credit card billing practices instead of having business benefits in mind.
According to Jennifer Saranow Schultz of the New York Times, there are four major provisions to the CARD Act that consumers should know about, especially college students.
“As a person who has maxed out cards and wasn’t able to pay it back, I think the CARD Act is an extremely beneficial thing,” said senior broadcast journalism major Jasmine Bramlett. “My mom told me not to get one. I should have listened,” she said.
Under the CARD Act, to open a credit card account under the age of 21, consumers will need either a co-signer or evidence of having an income to make monthly payments.
In addition, credit card companies can no longer market cards on college campuses.
Often times what trips college credit card holders is a lack of notifications.
Credit companies generally give cardholders a 45-day notice of changes to terms on their account including interest rates and late fees.
Under the new CARD act, monthly bills must have a consistent due date month-to-month and companies will be required to give consumers the option to cancel their cards before any term changes take effect.
Also under the new CARD act, a grace period on an increase in interest rates will be instated for the first year after an account is opened.
In addition to this freeze in rising interest costs, after the 12-month grace period is over, rate increases can only apply to new charges.
“Like I said, these provisions are huge and very helpful,” Bramlett said. “Unless you positively know that you can pay back the credit, do not apply for a credit card.”
Possibly the biggest provision to the CARD Act is the elimination of unwanted charges and fees.
Under the new changes, a transaction that would take a cardholder over their limit must be turned down by the credit card company unless the cardholder has told the company to allow such transactions.
By enforcing this provision, “over-the-limit fees” – which are common fees associated with cardholders – will be eliminated, saving consumers over $10 million.
Obama said, “These new rules don’t absolve consumers of their obligations to pay their bills, but they finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions.”
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