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Bill limits credit cards for under-21

BY NICOLE KARLIS | FEBRUARY 08, 2010 7:30 AM

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UI students will soon have to sift through a heftier process to carry a plastic card.

Starting Feb. 22, students under 21 will be required to have a cosigner or show proof that they can independently take responsibility for any debt when applying for a credit card.

The Credit Card Accountability Responsibility and Disclosure Act aims to protect young adults from entering the dark world of credit-card debt, according to a release from the White House.

UI senior Kristine Wozniak said she supports the act and wishes it had been implemented a year ago, which would have eased her debt woes.

“If I hadn’t been able to apply for a credit card without a parent or cosigner, I wouldn’t be so stressed out right now,” she said.

Locally, representatives from the UI Community Credit Union see the bill as a positive change to enforce credit-card responsibility among young users.

“If students don’t use credit cards responsibly, they can be stuck in debt for a long time,” Jim Kelly, the senior vice president of marketing at UI Credit Union, wrote in an e-mail. “As long as usurious credit cards exist and are targeting students, we think the change is good.”

Kelly said the credit union’s staff members work to teach students credit-card responsibility while not burying students in debt.

The credit union does not currently require a cosigner for its estimated 8,500 customers who fall between the ages of 17 and 21, but it will implement the new rule Feb. 22, Kelly said.

In order to show they can make monthly payments, young adults will have to provide proof of income from a job or wages, Kelly said.

But protecting young people is only one of many critical elements to the act. Others include prevention of unfair fee traps, plain language disclosures, and accountability, according to a White House release.

While some think the act will enforce responsibility, local economists do not see the change having an effect on the bad economy.

The limited number of credit-card users will reduce spending but it will not knock the country out of the recession, said UI economics Associate Professor John Solow.

“This is not the big problem that we face right now,” he said. “The big problem we face is housing markets and things like that.”

UI political-science Associate Professor Tim Hagle said politically, the question is whether this is an issue that requires government intervention.

“It’s still the government getting involved in what is essentially a private transaction,” he said. It’s a matter of finding the right balance between government power and citizens’ rights, he said.

But as the government prepares to limit another privilege to those over 21, it is creating a new controversy.

“I’m not so sure we need a law,” said Charles Whiteman, the senior associate dean of the Tippie College of Business Associate, noting that government officials are saying that 18-year-olds are well-qualified to serve in the military but not to hold credit cards.


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