Life without plastic is unthinkable. So says majority of Americans who depend on their credit cards to buy groceries, fill up their gas tanks, and pay bills every month. America's consumerism society has had a complex relationship with credit cards. For many, plastic has become indispensable. However, for those who have financial problems, cards can spell disaster.
On average, most Americans finish college owing more than $4000 to banks and card companies. This amount increases dramatically especially if the cardholders' purchasing habits are unchecked. Soon, many consumers are facing thousands of dollars of bad loans and debts. Ignoring it can only mean more trouble. Most financial institutions and employers examine the cardholders' credit reports and histories for any signs of financial distress.
Because of this, the federal government is poised to implement tougher restrictions on how banks and card companies go about their business practices. Starting February next year, card issuers will have a more difficult time raising interests and cutting credit for struggling cardholders.
Young consumers will also no longer be able to acquire their own credit cards until they turn 21. However, the law allows teens to get their own plastic as long as they present proof of adequate income. Applicants can also bring along their parents or guardians to co-sign for them.
According to Rodney Anderson, however, the parents will be at risk if their kids fail to pay their balances on time. Late payments and delinquencies will reflect on the parents' credit scores and histories. This has made many parents wary of giving their young consumers credit cards. Nevertheless, many American parents believe that in this time and age, credit cards are a necessity.
Some teens have also voiced out their sentiments regarding this issue. For many young consumers, the law comes off as unfair because people under the age of 21 cannot enjoy their independence fully.
However, the new measures are forcing many families to rethink how they spend hard-earned money. Parents and their teens are now considering getting secured credit cards. Experts say that this action will help young cardholders build good credit records. By using secured credit cards, teens can have an extra buffer to protect their credit scores. secured cards require bank accounts with a certain amount of money. The money in the account will serve as collateral in case cardholders fail to settle their dues on time.
Many industry analysts say that with the February deadline nearing, more and more American teens are expected to get secured credit cards.