Qualifying for student credit cards is about to get tougher. In February 2010, legislation takes effect that places restrictions on offering credit to people under the age of 21. The legislation, the Credit CARD Act of 2009, is intended to protect young consumers, but will make it considerably harder for anyone under 21 to get a credit card. The wallet full of student credit cards may soon be a thing of the past.
The changes that take effect on February 22, 2009, are:
* People under 21 must show evidence that they have "reasonable income," or enough income to pay off their line of debt. If they cannot show proof of reasonable income, they must have an adult cosigner who is willing to take on the debt if the younger person defaults. This restriction will hit young creditors the hardest. After it takes effect, young creditors will not be able to casually sign up for a new credit card offer that arrived in the mail, or even casually get a store card at Macys or Sears. Many students will be able to get their parents or guardians help in signing up for credit cards. However, students whose parents have bad credit will have severe difficulty in qualifying for credit cards.
* Credit limits on student credit cards cannot rise without the permission of the older cosigner. There will be no more surprise announcements in the mail telling you that your line of credit has increased by $1,000, and you should spend part of it on something decadent for yourself "because youve earned it."
* Card companies cannot send prescreened card offers to people under 21 unless the people have opted in for offers. That means you are unlikely to get tempting offers of 0% for 6 months and 2% returns on all purchases (and please dont look at the real interest rate) unless you know where to sign up for credit card offers. Since on campus credit card solicitations are about to see a crackdown as well, youll be exposed to fewer credit card offers overall.
The legislation is designed to cut into the cycle of easy credit and easy spending that catches so many young creditors. In itself, thats laudable; studies show that college students already graduate from college with a heavy burden of credit card debt, and many college dropouts cite the inability to keep up with debt payments as a reason for leaving school and taking a job. But our credit system rewards people with long credit histories and penalizes people with short or nonexistent credit histories. Some analysts criticize the Credit CARD Act of 2009 for its treatment of young creditors, saying that young people who will not be able to qualify for credit under the terms of the Act for reasons out of their control (say, because a parent has bad credit or because a guardian refuses to cosign) will be at a severe disadvantage when they turn 21.
Various groups are lobbying for change or repeal of parts of the Credit CARD Act of 2009 in order to improve young creditors treatment. However, in the meantime, the best advice for young creditors is to secure your student credit cards now, before the Act goes into effect, and get your parents or guardians on your side so you can continue to get access to new student credit cards in the future if you receive offers with better terms than your current student credit cards.

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by: barrywaters
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Read more on credit card applications, visit getsmart.com/credit-cards.

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