The CARD Act made it much harder to get college students to sign up for a credit card

No more free frisbees with credit card sign-up on college campuses

Along with the cool breeze, September brings the first full school year since the CARD Act (Credit Card Accountability, Responsibility, and Disclosure) went into effect. And the place most affected: the college campus.

Before the new rules, credit card companies lured 18-year-olds to sign up for credit cards by offering free gifts like Frisbees, T-shirts, and even pizza. Now that’s over—and it’s about time! But what do young adults and their parents need to know about the rules? And how are some kids sneaking around them? Here’s what you need to know:

The rules

Card applicants under 21 must now either show proof of income or have an adult co-sign in order to get a card. To protect college students from being easy prey, card companies can’t offer free gifts and credit reporting agencies can’t give card companies the credit reports of under-21 consumers unless the consumer requests it. That means unqualified kids will receive fewer preapproved card offers.

The loopholes

According to a recent article in the Denver Post, some students are asking (or paying!) older peers—rather than parents—to co-sign. The law doesn’t require a parent to cosign, only a person older than 21. So, to avoid their parents, some crafty young people are turning toward slightly older peers. In other cases, some parents have bad credit themselves (who do you think got us into this crisis?), and therefore don’t have the ability to co-sign for their kids.

The lessons

Parents should be cautious when agreeing to help their kids get a credit card they may not be ready for. Co-signing makes you equally responsible for the charges made. So if a 20-year-old runs up a $10,000 debt and then flakes out, the co-signing parents must either come to the rescue or suffer the effects on their credit report and credit score. If possible, wait to get a card until you’re old enough to do it on your own—when you have a job and an income. If you’re anxious to create a credit history, pay back your student loans. And keep in mind that the credit card companies overplay your need to have a credit history. It’s far more important to avoid digging yourself into debt before you even graduate.

CARD Act college students cosigning credit cards free gifts

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