The Credit Card Accountability Responsibility and Disclosure Act (CARD), which will make it more difficult for college students to obtain credit cards, took effect Feb. 22.
“My opinion is that, in general, it will hurt the average student,” Ross Dickens, Chair of the Economics and Finance Department at USA, said. “It will certainly hurt the student who would have been able to use the card responsibly.”
Under the newly implemented law, those under 21 must have a co-signer that is willing to put his or her credit score at risk. If a co-signer cannot be found, the applicant must show that he or she has the financial ability to pay off a credit card.
A study done in 2009 by loan company Sallie Mae found that 84 percent of college students have credit cards, and only 17 percent of them regularly pay off their cards each month. The average debt accrued from those credit cards is $3,173.
Making it more difficult for college students to get credit cards could make paying for education harder. The Sallie Mae study concluded that 92 percent of undergraduate students with credit cards charged their education expenses.
The biggest thing the act is supposed to do is make charges from credit card companies more transparent. The CARD Act was put into place to prevent credit card companies from doing things like raising interest rates without issuing prior notification to those affected, but it does not limit the amount of fees that can be used.
The companies will find ways to adjust for their risk and still be profitable, according to Dickens.
“So, in the end, while perhaps well-intended, the legislation will actually do more harm than good for the average person – in my opinion,” Dickens said.
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