New Rules for Credit Card Companies

And there is light at the end of the tunnel...

Credit cards are for many people, a way to help supplement their income. For college students it is also a way to afford books and help finance their education. Unfortunately, credit card companies have gotten out of hand forcing the federal government to step in. For years, students as young as 18-years old have been approved for amounts they simply can not afford. Credit card companies make money off of the unfortunate consumers who purchase things on borrowed money and fall behind in their payments due to lack of financial responsibility or part in parcel to the ever rising interest rates. Well, the good news is that Barack Obama and team are working to put forth new restrictions on the credit card industry.

On Wednesday, May 20th the House voted 361-64 to a measure already approved by the Senate in a 90-5 vote. Highlights of the Credit Card Accountability, Responsibility and Disclosure Act are featured in a news release from the Board of Governors of the Federal Reserve System.

The act will provide protection to consumers with high debt from unfair credit card practices and overdraft services. It will give consumers a reasonable amount of time to pay their bill and will clarify when a payment is considered on-time . Cardholders will no longer see charges for paying by phone or surprise charges for such things as being over the limit. The bill will also restrict the number of young adults being approved for credit. Adults under the age of 21 will be required to prove they can repay the money or be forced to add a co-signer. Consumers will also be given 45 days advance notice before interest rates are raised.

Feel free to check out an article on the new restrictions from the Boston Herald here.

It is still up to you, the student to be responsible for your financial well being. It is very easy to get into debt, but it is not so easy to repair all the damage that is done to your credit. At least with these restrictions in place, students with no income will be more protected from falling into an unhealthy pattern.

You can expect Barack Obama to sign the act today, it will go into effect in nine months.

Thanks for reading,

Savvy Student