New Laws Regarding College Credit Cards

Graduating from high school and starting college? What an exciting and scary milestone to cross! For most, this is the first real experience with becoming an adult. Most new college students leave their parents home, move to a new city, live in their own apartment for the first time, and become completely responsible for all the day-to-day responsibilities that come with living on your own. But, perhaps the most important of these responsibilities is: financial responsibility. College comes with a very hefty price tag. Not only do you have tuition, books, and fees but many colleges offer room and board plans as well, which can add an additional several thousand dollars a semester to your bill.

With the prices of college tuition rising nearly two or three times the rate of inflation in recent decades, college education costs are more than most typical middle-class families can save for, even using financial aid options available. So when new college students show up on campus and there are a number of credit card companies there offering a free gift when you apply for a credit card, students are being sucked in, in masses. Without any real understanding of debt and financing charges, and without any easy way to pay for their schooling, students quickly "max out" their new credit cards by charging everything they can. Before they know it they have hundreds or thousands of dollars of debt, with little or no income to even start paying it off. Not only that, but they are being charged outrageous interest rates because they have no credit card history, or other qualifying factors to get them cheaper interest rates.

Fortunately, there are some changes on the horizon to help. Starting in February, rules for those under the age of 21 applying for a credit card will change. Let's take a look at some of the changes:

1. Getting a credit card will require a co-signer or proof of income
2. Financial classes will be required upon college entrance
3. Credit card companies will no longer be able to give "gift" incentives on campus

While this is a good start to helping new college students make better choices and decisions regarding college credit cards, it is only a beginning. Some college students argue that financial classes should start in high school to help them understand debt and give them more financial information before they are in a desperate situation. Learning about how to choose a student credit card, before they are offered, is important as well as information on how to manage their credit card balance before it becomes unmanageable.