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If You Want a Credit Card, Apply Now

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The Senate  passed sweeping credit card reform in 2009, including provisions that made it nearly impossible for college students to get credit cards. Under the new legislation, no one under the age of 21 can qualify for a card unless their parent, legal guardian or spouse (over the age of 21) is the primary cardholder. If you want an exception to the cosigner requirement, you have to submit proof of your income.

The law also caps the amount that student card holders could borrow at $500 — or 20 percent of their annual income, whichever is greater. And if you wanted to request an increase in your credit line, you’d have to send in written permission from the co-signer.

(You can read more about the bill’s impact on college card holders at the chronicle.com)

The bill went into affect in 2010 — and those of you with credit cards already in your wallet were “grandfathered” in.

So, here’s the question: Has the new legislation been a good thing or a bad thing? At first glance, it might seem overly paternalistic (Want to charge that pizza you are about to order for dinner? Better ask mom and dad first!).  And I can imagine that there will be a host of problems for those students who are footing their own college bill. After all, if mom and dad aren’t giving you money for tuition, room and board, why should they get to say whether or not you get to carry a Visa card?

Of course, nothing is stopping students from getting and using a debit card, which is accepted just as universally as a credit card these days. The only difference is that you are spending money that you actually have in your bank account vs. money you may — or may not — have at the end of the month.

Another drawback I can see with the legislation is that it may make it harder for students to establish their credit history. Without a good credit score, recent graduates may have a hard time renting an apartment, qualifying for low-rate car insurance, or even getting a job (yes, some employers do pull a credit report before making a job offer.)

All that said, I am still inclined to believe that this new legislation is a win for students. It will help to protect them from the oft-times predatory lending tactics of credit card companies. And, hey, even if students aren’t being snookered into taking out a credit card, they certainly are being enticed to use it: According to a 2008 study by Nellie Mae, the average college senior had over $4,000 in credit card debt.  Those minimum payments end up being an awful burden on a starting salary — especially when you take into account that most graduates also have major student loan debt to contend with as well.

That’s my opinion, at least, but I’d love to hear what you think.

Do you believe it’s a good idea to curtail credit cards among college students? Or do you think that the problem is not with the plastic but the people using it? Let’s hear your opinions!

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