Applying for a Student Credit Card Under the Credit Card Law

Before the Credit Card Accountability Responsibility and Disclosure Act of 2009 came into existence, many creditors lured students into getting a credit card. As a matter of fact, many campuses collaborated with credit card companies. While these deals benefited the educational institutions, students that had no jobs or income easily fell into debt. This is why the CARD Act of 2009 was passed. The objective of this Act was to make sure that the youngsters stay out of debt until they graduate.

How Students Get a Credit Card

When the CARD Act was signed by President Obama, acquiring credit cards changed. Prior to that, students could easily apply for a card and get approved even though they did not have existing credit history. Now, there are rules that have to be followed by both the issuer and the applicant. If you are a student and you would like to have a credit card, you should meet the following requirements:

·         You are 21 years old and above.

·         You are 18-20 years old with an income proof.

·         You are 18-20 years old without a job but you have a co-signer.

If you are below the age of 21, there are a few alternatives for you. As mentioned, you need to have a co-signer in order for you to qualify for acredit card. You can ask one of your parents to co-sign. Doing so will provide you with the benefits similar to having your own credit card. In addition, you can build your history without the need to pay the credit card bills each month. If you default on a payment, your co-signer will take the hit. It is required by the CARD Act that the parent or the guardian sustains connection to the account even after the student turns 21. This is applicable if the cardholder cannot demonstrate his or her ability to make payments.

Another option is to become the authorized user on your parent’s credit card. This is similar to having a co-signer for the card but with an advantage. Parents will be able to immediately see if their child goes over the limit or makes expensive purchases with the card. In the co-signer option, the parent or the guardian is only informed once the bills arrive or the default state has snowballed.

Other Options for Students Below 21 Years Old

If you get denied for your application or you do not meet the requirements given above, you can use debit cards instead. The problem with a debit card is that it does not do anything to your credit score. However, since it is connected to a bank account, you can stay out of debt as you rely on cash.

To build your credit, you can use secured credit cards. You are required to deposit cash for the account. The deposit will be used for security purposes in case you default on your payments. The amount you deposit will be used to determine your credit limit.

The CARD Act aims to keep young people away from early financial obligations. The new law also encourages students to participate in educational programs that tackle proper debt and credit management.