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New Bill Gives Kids No Credit

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Bill goes after credit card companies that prey on college students.

girls shopping using credit card

They set up shop on college campuses across America ... credit card companies eager to sign up the young, and usually broke, with their first-ever credit card. To most college kids, the thrill of getting access to easy credit is rarely dampened by consideration of maintaining a solid credit history -- or filing for bankruptcy.

A new bill seeks to change this financial downward spiral. Called the Credit Card Accountability Responsibility and Disclosure Act of 2009, it would require parents to co-sign on a credit card application for anyone under 21 years of age -- unless they are financially independent or complete a financial education class.

New York Sen. Charles Schumer is in favor of the bill, according to Newsday: "Credit cards should be a leg up for college students, not a leg trap that snares them in unbearable debt," he told the publication.

Danielle Hoston, a business and finance expert, thinks the only thing a credit card is good for is establishing credit and demonstrating financial responsibility. She advises to at least keep your kids' cards down to just one.

Here are Danielle's tips for responsible credit card use:

Cash is king
Advise your children that buying on credit is STILL like buying with cash, except that you are paying MORE due to interest and credit card fees.

It pays to pay on time
The most important thing to remember about managing your credit is to NEVER PAY LATE. Late pays can lead to higher interest rates and negative reportings on your credit report that can have long-lasting and very EXPENSIVE repercussions.

Leave home without it
Stay out of trouble by leaving your credit card at HOME and NOT using it. If you can't pay with cash, you probably can't afford it. Any outstanding balances should be paid in full at the end of the billing cycle before the interest accrues.

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29 comments so far | Post a comment now
AM  April 24, 2009, 9:28 PM

I don’t know about this one… I’m totally undecided. On one hand college students seem to be the last people that should be given a credit card. Let’s face it most are already starting off in debt due to student loans and most don’t work full time so they may not be able to pay the bill. On the other hand, if they’re over 18 then they are adults and should be able to make these types of decisions for themselves without government interference. hmmm….

Bec Thomas April 24, 2009, 9:51 PM

I’m not sure that I like this bill, I agree there is a problem but I think there should be stricter regulations place on the card companies, not the people that are getting the cards. Most college students don’t qualify to get a loan for say a house, so why do they qualify for a credit card?

ame i. April 24, 2009, 10:55 PM

I received my first credit card offer when I was 18 from the company that starts with the letter C & has the word bank in it. I’d only been in college for 3 weeks and had never had a job. I still have that card but haven’t used it for years.
In my opinion, 21 year olds (for the most part) are not mature or responsible enough to have a credit card.

AM  April 24, 2009, 11:30 PM

The answer may lie in how we teach our kids about finances and credit scores … Perhaps there should be a class in high school on the subject required for graduation that teaches kids about credit cards, FICO scores, investing, 401k’s and all that stuff… I was never taught about any of that and had to figure it all out on my own. My parents didn’t even teach me… so I imagine there lots of kids who could benefit from this type of information.

amy April 25, 2009, 12:32 PM

I just wish more emphasis would be put on teaching our kids how to handle these things beginning in high school!!

Kristi April 25, 2009, 1:43 PM

I remember when my dad had me get my first credit card he told me to only use it if I had the actual money to pay for whatever I was getting. He also told me to always pay off the entire amount not just the minimum (sp?) payment. Good tips its worked for me so far!

Anonymous April 25, 2009, 7:42 PM

Parents need to teach their kids about money and credit cards in general. If the parents are spenders, chances are the kids will be too.

Anonymous April 27, 2009, 9:31 PM

This bill is horrible. I’ve been working since 16 and tried to get my credit card as soon as possible. In fact the credit card(s) I got are the reason I was able to attend college. I didn’t qualify for any grants or loans until around age 20.

Hesrndnf June 27, 2009, 5:33 PM

3n40Nt comment6 ,

credit card low balance transfer June 9, 2010, 12:17 PM

I think it’s gonna take me at least 2 years to pay off my exisitng high interest card debt. Looking to do some credit card arbitrage.Can you email me some balnce trasfer cards that you recommend for my situation?

best balance transfer credit cards June 13, 2010, 1:11 PM

I know that glorious feeling of sticking it to them (BoA)! These companies just take advantage of us when they have us and then suddenly they fall all over themselves when we have them!

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