With the implementation of the Credit CARD Act of 2009, one of the changes expected to take effect is its impact on college and university students who were once a target of marketing campaigns to compel them to sign-up for a card membership.
Credit card companies used to give-away stuffs such as T-Shirts and i-Pods to entice kids into owning a credit card. They are also assured that such a membership could be cancelled at any time. Because of this, Bill Wilhelm, adviser of "Cash Counts" project, even oversaw a video production in 2005 to educate students about the pitfalls of owning a card. Among other things, the short-film describes how students go in deep debt on what is supposed to be an "only in emergencies" plastic use. But because of the enticement of getting to purchase things without cash-at-hand, some eventually use it without realizing the debt they are piling-up. The Indiana State University associate professor of business also added that just like any other place, students from around the country also experienced having trouble with credit card debts.
The new law, among other things, makes it harder for students to own a credit card. Those 21 years of age and below are prohibited from owning one unless they have a co-signer, or they could show ample proof of an ability to pay their debts. The co-signor must also be more than 21 years of age. Other provisions include the obligation of issuers to inform card holders of fees being charged for simply maintaining one such as minimum monthly payments.
Wilhelm expressed that the law would be a big help to prevent students from indebtedness. However, he still advised on having due diligence in their card use. The Indiana Youth Institute reported that in 2004 alone, the median debt of undergraduate college students amounted to $1,200 in the Midwest. This comprises of about 80 percent of all undergraduate college students. It must also be noted that 20 percent had balances in between $3,000 to $7,000.
The figures only died down in recent years because of the recession. Currently, the revolving debt among consumers is about $874 billion. Last year, it amounted to about $945 billion. The Federal Reserve Board said that since 2008, household revolving debt had been continually decreasing. A revolving debt or revolving account is a type of debt account wherein the full balance need not have to be paid every month by the debtor to the creditor. The payments made are only minimum payments based on the balance amount.