Changes Make It Rougher To Give Credit Cards To College Students

Due to the fresh credit card modifications that are starting up next year, card issuers will have a hard time getting teenagers on college campuses to apply for credit cards without their parents’ knowledge. As students arrive on campus, card issuers will be there to speak to them at many schools.

“Issuers will try to continue to market to college students between now and the time the legislation takes effect,” said Bill Hardekopf, chief executive of LowCards.com, a site that tracks cards. That means instructing them to budget and handle a checkbook and debit card precedent to having a credit card.

Card issuers main target goal are young adults because people tend to be attached to their first card, said Christine Lindstrom, U.S. Public Interest Research Group’s higher-education program director. Plus, young adults are more expected to carry revolving debt and pay late, creating more interest and fees for the card issuers, she said.

Card issuers also will need a co-signers approval to increase credit limits of a cardholder younger than 21. And issuers won’t be authorized to offer T-shirts or trinkets to entice students. Some credit experts say students need a card to start building a credit history and score.

But there’s no need to rush this, and it can ricochet if students mismanage cards. Young adults should worry less about their credit score and focus more on building good financial habits between ages 16 and 21, said Craig Watts, a spokesman for FICO, the company that created a generally used credit score. “The credit score will take care of itself,” he says.

A survey made public in April by Sallie Mae reveals that many young adults aren’t knowledgeable managers of credit. Undergraduates on average carried record card debt of $3,173, or 46 percent more than four years earlier.

Several schools, out of concern for students, don’t admit marketers to pitch cards on campus. After a few years of living on their own, paying bills and managing credit, they can apply for a credit card under their own name when they turn 21. Never co-sign, advises Janet Bodnar, author of “Raising Money Smart Kids.” Besides, she added, students are more likely to learn money skills if responsible for their own debt.

Mallory Megan works for a collections agency that works with a debt collection lawyer. Also, she does articles on business and finance, the credit industry and collections agencies.