Another Hurdle for Those Under 21

Under the age of 21? You might have an obstacle standing in your way. As of May 22, 2009, President Obama signed into law the Credit Card Accountability, Responsibility and Disclosure Act of 2009.

According to Sen. Barbara Mikulski, the law was set in place to prevent credit card lenders from restricts credit card lenders from “targeting college kids to weigh them down with debt before they even graduate.” Credit card lenders are also restricted from hiking up interest rates and issuing excessive fees under the bill. However, there are stipulations set upon consumers as well. No one under 21 can get a credit card without a co-signer or without proof of sufficient income.

For some the automatic response is positive, but with for some this law might pose a problem. Having a source of credit taken off the table means that those under 21 who do not have a co-signer nor have a full time source of income will have to find alternative sources of credit including secured cards or pre-paid cards. However, finding another viable source of credit may prove difficult since credit scores are being used by an array of sources, for apartments, utilities, mortgages, auto lenders, insurance institutions and potential employers.

This law not only restricts young people but lenders as well. According to Myrna Gusdorf, business law instructor at Linn Benton Community College, this law serves as a predatory practice for lenders that need to be reined in. “They can’t send cards to anyone, so people under 21 are less likely to be victimized.”

Having this law in place is also believed to limit students from digging themselves into debt by financing their college expenses through credit. Gusdoff believes this is a recipe for disaster. "They are saddled with debt, have poor credit and have a very scary amount of time to pay.”

Despite the restrictive nature of the law, there are still viable options for those who need further assistance. However, some of the other options available might not be better than the traditional credit methods. For example, pre-paid cards are racked with hidden fees.

“Congress passed the law with good intentions, but there is a downside.” says Michael Houser, LBCC accounting instructor, who choose to co-sign for an apartment for his daughter who was in college at the time. What the law does not advertise is the hidden stipulations. According to MSN.com, credit card companies will issue cards only to young adults with a co-signer who has good credit histories. And if the co-signer meets this requirement then they are financially exposed.