Law shields youth from credit cards
Legislation designed to protect young consumers against the potential dangers of credit cards took effect this week.
As part of the current administration’s goal of protecting consumers, president Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure Act (CARD) early last year.
"For too long, credit card companies have had free reign to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs," Obama said in a statement. "But... we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable."
Jared Bernstein, senior economic adviser to Vice President Joe Biden, said the goal of this act was to shield consumers from practices that brought on the current recession and to keep card companies from being "shady" with patrons, particularly young ones.
"[Consumer protection] is a key part of the administration’s initiatives," Bernstein said in a conference call for college media.
One of the Credit CARD’s provisions is that credit card companies are no longer allowed to issue cards to consumers under 21 years of age unless they can prove that they can pay off their incurred debt or they have a co-signer over the age of 21.
Bernstein said that consumers taking on too much debt is one reason the country is fighting an economic recession, but he said debt has an especially adverse impact on young Americans. He said it is tougher for students to get a career started if they have massive debt and that a damaged credit score makes bigger purchases down the road more difficult, which is what the legislation is guarding against.
Obama said, "The new rules are an unprecedented step in my administration’s ongoing efforts to strengthen consumer protections and enact meaningful financial reform."
