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Before college next fall, have the credit card talk with your kid

On Behalf of | May 23, 2011 | Credit Card Debt, Firm News

Maybe you have already attended your child’s high school graduation, or maybe it is just right around the corner. It marks a time of excitement, especially for the child, when they are about to embark on their pursuit of independence and knowledge.

In the midst of the excitement, don’t forget to prepare your kid for this big jump. As you probably remember, they will be faced with lots of temptation when they get to school. Temptations won’t just include parties and drinking. Opening a credit card will also be an appealing option, despite new federal regulations.

In 2009, congress passed the Credit Card Accountability, Responsibility and Disclosure Act. It includes provisions regarding college students and credit cards. According to sources, however, banks have figured out ways to work around the laws that are meant to protect students from racking up credit card debt.

The law prohibits credit card companies from handing out free, tangible gifts to college students to entice them into getting credit cards. Banks have reportedly sidestepped that rule by gifting coupons and bonuses with new cards.

Also mandated by the law is that students under 21 need a cosigner before being approved for a credit card. That rule apparently has been ignored by some companies whose websites supposedly offer credit cards with no cosigner required.

Credit card companies are not allowed to set up tables on college campuses to sign kids up. That rule, however, hasn’t been too difficult for banks to work around. They put tables just off of campus, where there is heavy student traffic.

The overall message:

Even though lawmakers have put rules in place to help prevent student credit card debt, parents and guardians should not assume that their college kids are not at risk. Talk to them about credit cards, and if you don’t think you have the expertise to talk to them, learn or find someone who does. A lesson in credit cards and debt is just as valuable as the many lessons they are about to learn in college.

Source “What college kids, parents need to know about credit cards on campus and credit card debt,” Joe Ducey, 19 May 2011

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