Guest Post from Joel. About Author: Joel Ohman is a Certified Financial Planner™ and the owner of a credit card website with a really cool credit card finder tool and some of the best credit card calculators and other tools for finding the best credit card anywhere on the Web (or so he likes to think at least so we won’t burst his bubble)!
The Credit Card Accountability, Responsibility, & Disclosure Act (CARD) that was signed into law last year and set to take effect on February 22, 2010 addresses some important issues that revolve around student credit cards. Here are some of the key changes that students should be aware of and also some tips for finding the best student credit card.
#1 Got Income?
In the past credit card companies could offer credit cards to students even if they had little or no income to show for themselves. Now, things have changed in that student credit card issuers are only allowed to approve a student credit card application if the student under the age of 21 is able to show proof of income or some other means to repay the credit card loans. The days of skating by on the virtue of your good credit score and good looks alone are over. However, there is one exception: if you have a parent, guardian, or someone with a source of income that is willing to co-sign for you and become liable for your credit card debts then even if you don’t have any income of your own you can still get a student credit card with easy.
#2 No More Credit Card “Schwag”
College campuses in recent years, especially around the beginning of each semester, can often resemble one huge colorful marketing event/party thrown by credit card companies giving out free t-shirts, free book bags, free pizza, and other goodies as an incentive to get as many students as possible to apply for their particular student credit card offer. The new rules expressly prohibit any kind of incentivized marketing by credit card companies on college campuses, credit card issuers cannot market credit cards to students within 1,000 feet of a college campus or a college sponsored event, and colleges and universities are now required to fully disclose any kind of financial relationship that they may have with various credit card companies.
#3 Good ‘ol Mom and Dad are Still in Charge
The merits of treating adults over the age of 18 as minors can be debated at another time but the new credit card rules stipulate that if a student is on a joint credit card account with their parents then the parents must give consent before there are any increases to the credit limit. There are many things that students under the age of 21 can do but the new student credit card laws are designed to make sure that asking for a credit limit raise on a joint account has to get the A-OK from the parents first.
What to do When Looking for a Student Credit Card
The new student credit card rules can certainly seem restricting but there are still many different student credit card options for those who are willing to look for their credit cards the smart way. Here are a few quick tips to make sure that you end up with the student credit card that is best for your needs.
- Do Your Research – Don’t just apply for a credit card simply because you happened to walk by the booth of ABC Credit Card Company on your campus. Spend some time learning about the various student credit card offers and choose the one that best meets your needs.
- Be Financially Responsible – It can be easy to fall into the habit of using a credit card without planning ahead and making sure that you have the money in the bank to pay the balance off in full each month. Plan ahead and discipline yourself to use your student credit card responsibly.
- Go for the Rewards – Those who misuse credit cards by carrying a balance are having their credit card work against them. Make your credit card work for you by choosing a rewards credit card that can earn you cash back, airline miles, points, etc. As long as you pay the balance off in full each month and don’t spend anymore than you otherwise would then that is essentially free money. Get in the habit of using your credit card to automatically pay all of your bills and then if you schedule your credit card balance to be paid off in full each month then even something as mundane as paying for your student car insurance each month will end up putting money back into your pocket. Be forewarned though, if you carry a balance on your card then the interest charges are eating away at any of the benefit of your cash back savings.
What do YOU think about the new student credit card rules?
