Currently, close to two million college graduates in America are without a job. To add to these woes, each year, colleges recruit at least 20% lesser number of college students, thus increasing the number of unemployed youth. The minute the college student lands himself a job, a large part of the salary is set aside to clear the debts incurred during his college days.
The government of America has been urging its citizens to make effort to clear off their outstanding dues, which in turn will not only benefit them but also the country. In an effort to help them in this direction, the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) has been put into effect. There are certain rules in this Act that have been incorporated to help students, as well as their parents.
Any student below the age of 21 applying for the card will have to ensure the applicant has either parent as the co-signer. However, if the student in below 21 and is able to produce sufficient proof of his employment and prove that he can clear off his credit card dues on time, there is no need for a co-signer for the application. The approval of the co-signer is a must if the bank needs to increase the credit limit on the credit cards of students younger than 21 years.
Before the tough economic times set it, it was not uncommon to see bank representatives queuing outside colleges waiting to lure students with a variety of freebies so they sign up for the credit card from their bank. However, with the CARD Act coming into play, banks cannot resort to this approach to attract students to opt for their credit cards.
One of the strategies adopted by the banks in the past was to get into an agreement with a particular university or college to share the revenue they make when students apply for their credit cards, avail it and use it. In the past, such deals were signed behind closed doors. However, thanks to the CARD Act, every institution has to bring out such deals in the open and be transparent about the various clauses in it.
The credit bureaus are now asked to refrain from providing credit information of students below the age to 21 to credit card lenders. The bureau has to first get the approval of the student and then divulge the details. Hence, pre approved credit cards for students are a thing of the past.