10 Ways College Students And Parents Will Be Affected By New Federal Credit Card Law

On February 22, 2010, a new law commonly called 'the Credit Card Act of 2009' will take effect. It particularly affects college students and their parents. The following highlights the changes that they should be aware of.

(I-Newswire) January 31, 2010 - Effective February 22, 2010 credit card companies will be required to follow the guidelines established by the Credit Card Act of 2009, which was passed by Congress.

According to the educational website MoneyManagement101.org, the changes generally require credit card companies to:


- increase disclosures to card holders

- provide more lead time or advance notice when changing terms
- limit their marketing activities on or near college campuses

- require increased parental involvement in credit card activities of individuals under 21.

Below is a brief summary of some of the key changes that will impact college students and their parents.

Restrictions on Marketing to College Students:
In exchange for applying for credit, card companies are not permitted to give gifts (i.e. t-shirts, pizzas, mugs, etc) to college students on or near campus grounds.
Individuals under 21, cannot be sent pre-screened credit card offers unless they previously opted-in to get such offers.

Increased Parental Involvement:
Cards cannot be given to those under 21 unless they get an adult (over 21) co-signer who would be jointly liable, 
OR they provide proof that they have the ability (i.e. proof of sufficient income) to repay the debt.

Card companies cannot send prescreened card offers to anyone under 21, unless they have agreed to get card offers.
Card companies cannot increase the credit limit on co-signed credit cards held by college students under 21 unless they have gotten written permission from the co-signer.

Limits on penalties and fees
Over limit fees may not be charged unless the card user has provided permission for transactions over their credit limit.

Increased Disclosures:
Card statements need to clearly disclose the required due date, late payment charge, and any late payment penalty rate.

Card companies will also be required to disclose the following on the card statement:

-the length of time, and the total dollar amount of interest that would be needed to repay the card balance, if only the minimum required monthly payment.
-the monthly payment amount needed to pay off the total balance in 36 months

- a phone number to call for credit counseling services.

More detail of these laws and other money issues affecting young adults and their parents are available on the educational website MoneyManagement101.org