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Credit Card Applications » News » Other » Credit Reform Law Prohibits People Under 21 From Owning Credit Cards

Credit Reform Law Prohibits People Under 21 From Owning Credit Cards

April 02, 2010
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The credit card law which will be fully implemented this year was designed to limit banks and credit card issuers from employing abusive tactics, such as raising interest rates with impunity and imposing unreasonably high penalty charges for late payments. As a result, many companies are now jacking up fees and rates, knowing that they only have a limited time left in their hands before rate regulations set in.

One breakthrough provision in the Credit CARD law would prohibit card companies from issuing cards to applicants below 21 years old. Card issuers have been known in the past to give credit cards to young adults who do not even hold steady jobs or do not have means to pay for purchases. It is a known fact that young people have limited access to good-paying jobs and having credit cards at their disposal could tempt them into getting items they otherwise will not be able to afford.

A lot of kids nowadays are aware of the importance of credit scores and credit. They know that if they are able to build a respectable standing early, doors will be open for them later on in life, especially on occasions where they have to make big decisions such as purchasing a home and car. Alternatively, if they are late in the game and are not able to build up their scores early, they may have a difficult time accessing loans for big ticket items.

Fortunately, it is still possible for people to establish good credit scores early in life, even without owning a credit card. One option is secured loans. With this type of bank product kids can deposit an x amount of money in a bank to serve as collateral for a loan that they would be taking out. For example, a young adult can deposit $300 in a bank and the bank in turn will issue him a loan for the same amount. His deposit would earn interest while it is parked in the bank. Whenever he makes payment to his loan, points will be awarded to his credit score. If he misses out on a payment, the bank will just sequester his deposit and so his credit score will not be hit.

Another alternative are gasoline credit cards. Parents can get their children gasoline credit cards which they can use it when they are filling up. Since it is just limited to gas purchases, risk of overuse and overspending is reduced. Parents and their kids can also easily monitor and track purchases and payments. By the time kids leave school, they would have earned have a pretty decent credit score, which would give them a huge leg up later on in life.

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