In the previous post, you learned some interest rate surprises that can lead to debt trouble, even with the enactment of the Credit CARD Act.

Part of the change in the credit card industry is that kids starting college are no longer supposed to be bombarded with credit card offers on their way to class. Well, in case you haven’t guessed, credit card companies can work around that, which can lead to college students battling credit card debt, in addition to student loans and other debts.

Marketing to college students continues off campus

While it is true that credit card companies can’t market on college campuses, it doesn’t mean they aren’t anywhere else where a college student might go. In college towns the whole town is an extension of the campus, and getting free stuff for filling out an application can look mighty good.

Until October, certain fees can still be charged

Part of the purpose of the CARD Act was to reduce the amount of fees cardholders are expected to pay. These can include annual fees, penalty, application and processing fees. As the law stands, annual fees are limited on new cards. However, the language regarding other types of fees has been unclear. Fortunately, many of these loopholes will close when the CARD Act is amended this October.

Also, while students and non-working spouses could once use household income to obtain a line of credit, after October, only the individual’s income will be reviewed, reducing the chance that new applicants will be approved based on someone else’s earnings. This change will hopefully prevent college students from getting into credit card debt.

The good news is that bills are less confusing than they were in the past because of the Credit CARD Act. Cardholders are shown what they should pay to pay off debt in 3 years, as well as how long it will take to pay something off paying the minimum payment. Having this guidance can be beneficial to those who are either establishing credit for the first time or making up for past hardships.

Even with the CARD Act designed to protect consumers from credit troubles, there will always be those who will find themselves with credit card debt. Not even the legislation can protect consumers completely. Hopefully, the CARD Act will mature with time, based on the continued struggles consumers find themselves in as a result of credit cards.

Source

Fox Business: “Six Surprises Hidden in the Credit Card Act,” Lynnette Khalfani-Cox, Aug. 22, 2011