C.A.R.D. Act May Save Teens’ Credit Scores

The following passage is meant to help consumers learn about prepaid credit cards. It contains information about the new CARD Act that came into play in 2009 and is now in full force in 2010. Readers will be able to see how the CARD Act will change the way people under 21 build and maintain new credit, as well as how it decreases the ways of doing so. Additionally, this article will focus on how to solve these issues by using prepaid credit lines.

Credit card companies have been focusing on university alumni for several decades now. They assume that these students will sign up for credit cards in college and will likely keep them open for the rest of their lives. Also, university goers are a main target because creditors assume that these people will eventually be making more money than the average person. Thus, making them more likely to spend more money and repay their credit card debts.

An administration member of a well-known college and I sat down to chat about the possibility of preventing these greedy card companies from luring students into signing up for credit cards. Unfortunately, we decided that if the school banned the credit issuers from the campus, they would still find a place out in town to target the students. No conclusion was reached as to what to do to help these kids out. The problems started with credit card companies offering the kids a way to pay for purchases that the kids saw as a free ride. Most of the students obviously had no jobs and no means to pay off the debt when it came.

The questionable practice of tracking these kids down has come to bite the credit card companies back in a big way. The new CARD Act that passed this year was designed to make sure credit issuers don’t get too carried away with their marketing toward teens and young adults. No longer are creditors able to offer a free gift to students that apply for their cards. On the downside, the new laws also impose an age limit of 21 to be able to apply for credit. With a co-signer or proper employment, students under age 21 will still possibly be able to open an account. At least we won’t be seeing teens falling into debt due to having too many credit cards and no way to pay them off.

What about a young adult who can’t find a co-signer? How does he or she go about trying to build a good credit score? There are a couple of options. A good choice would be to obtain a bank card from their local bank. These cards are linked to the card holder’s checking account, and serve the same purpose that paper checks would. The benefit of using a debit cash card is the time it saves. Users don’t have to wait for their payments to clear as they do when writing out a paper check. The card is simply slid through a card-reading machine, and the patron is on their way. How could this be a bad thing, you ask? Most people who use check cards don’t watch the amount of money they’re spending. This can lead to a number of fees when it comes to banking, including NSF charges. Each year, banks get a lot of income from young adults not monitoring their bank card usage.

Another suggestion that may solve this problem is to use a prepaid charge card. A balance is paid in cash and is then preloaded onto a credit card. These cards are backed by major companies such as Visa and Master Card, and will display their emblem. Card holders may use these cards anywhere Visa and Master Card is accepted. The best part about prepaid cards is that the cardholder is only allowed to spend up to the balance on the card. Think of it as a credit limit. In the card holder’s favor, if there’s not a sufficient balance to cover the purchase, the purchase is declined.

It all sounds too good to be true, doesn’t it? There’s always a catch. With prepaid debit cards, card holders won’t have to be accountable for a monthly statement. This being said, they also won’t be recognized for paying their bill in a timely manner, which makes it hard to build credit with these cards. No prepaid card is available to help with this matter yet, but the future of them looks promising.

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