From February 22, 2010, some new credit card rules have come into action. These rules will change the working of the financial or rather the credit card market. Life will become easier as the problems regarding debt and credit will eventually lessen. There has been much agitation from summer, 2009 to introduce new rules on credit cards. Some rules like - the credit card companies cannot increase interest rates on existing balance, a notice is to be served before 45 days of changing credit card terms and interests had been introduced in December, 2009. On 22nd February, the rule for saving young college goers from unnecessary debt problems have been been made effective.
The law for those under 21
This law requires that colleges should educate the students about credit cards, its usage and the related problems. It also mentions that this education should include debt counseling programs, to help students deal with the card problems in a much easier way.
This law requires that the students under 21 need to show their financial capability to get qualified for a loan. In case, the students have a low income, the parents of these students are required to cosign for the account. The rule adds that the credit card companies should in no way try to tempt the students for taking a credit card by offering them any goodies like T-shirts or water bottles. Moreover, the educational institutions are required to publish their income from the promotions made by the credit card companies.
The law also requires that the credit card companies cannot pressurize or tempt the students to sign up for credit cards, but it needs the affirmation of the directors.
Response to the law
According to the market analysts, and the Federal Deposit Insurance Corporation, this law will lessen the debt problems faced by most of the youngsters. It will let young college pass outs to start their career on the right note without any imposing debts. Parents and consumers are happy with this law, as this will help assert more control over their wards. However, according to the members of the American Bankers Association, this can have an adverse effect too on the consumers. The interest rates may rise greatly so as to compensate for the loss of a great number of customers which included the college goers.
It is true that the law will protect the students from unwanted debts, but it is also true that because of this, they won't be able to build a good credit history and score. Thus, this will in future, create problem for them while trying to take a new loan, an apartment or a vehicle.
According to the Public Interest Research Group, the some students are finding it not that difficult to agree to the new law. Finally, the credit card issuers have accepted to comply with the new rule.