Building a solid credit history is an integral part of becoming an adult, but obtaining a student credit card got much harder for people under age 21 with passage of the Credit Card Responsibility and Disclosure (CARD) Act of 2009. The CARD Act has many provisions directed at curbing excessive fees and rate hikes. It also contains a provision designed to curb credit card use--and abuse--by young consumers.
Qualify for the best student credit card
Three key student credit-card provisions of CARD Act:
- People under age 21 must obtain the signature of a parent, guardian, or "qualified individual" willing to assume responsibility for the debt in case of default.
- Card issuers must gather information that demonstrates the student or youth has ability to pay on his or her credit card debt--no job, no money, no credit card.
- Applicants must complete a certified financial literacy or financial education course, including awareness of the trouble credit cards have caused past generations of young people.
In addition, credit card companies are limited in their ability to solicit offers of credit to people under the age of 21. This applies to both pre-approved credit card offers that appear in mailboxes and to credit card solicitors on college campuses.
"With this new law, consumers will have the strong and reliable protections they deserve,'' said President Barack Obama in a statement. "We will continue to press for (credit card) reform that is built on transparency, accountability, and mutual responsibility."
Best Credit Cards for College Students
Despite CARD Act requirements, some banks advertise student credit cards with no cosigner or minimum income requirements, according to a Washington Post report. At the University of Houston, 32 percent of incoming freshmen say they saw credit card companies marketing on campus, according to a poll conducted by a University of Houston Law Center professor.
What is your best student credit card option? The one you can afford to charge on and pay off. Many student credit cards have high APRs. Keep credit spending within reason to keep payments low, and avoid costly purchases. A good rule of thumb: If you can't pay in cash for an item, you probably should not buy it.