It is a law that a person under the age of 18 cannot apply for a credit card without a proper co-signer. This law does not prevent these youth under 18 from having or using a credit card, nor does it exempt them from the consequences of the debt that is associated with irresponsible spending.

New Year New Rules

There is much buzz about the new rules for credit card companies that are set to take effect in February of 2010.  These new rules will also institute an age limit for credit card holders.  This new Credit Card Act is designed to protect card holders by setting limits for lenders.  These limits will prevent unwarranted and unexpected fees and rates.  The amount of debt that continues to accumulate because of credit card use is on the rise. More alarmingly is the debt that is held by youth under the age of 21.

In addition to these new rules that govern the credit card industry it will also become increasingly difficulty for youth 21 and younger to get approved for a credit card.  There are a few exceptions.  If the under 21 year old has the ability to make their payments or obtains a cosigner for the card this blanket rule may be waived.  There will also be an authorization process to ensure the information is accurate.  These strict new guidelines are a step towards protecting youth from the chronic credit card debt that ruins the financial future of many Americans.

Bankruptcy Still Rising for College Kids

According to the American Bankruptcy Institute 19% of those who filed for bankruptcy in 2009 were college students.  The frequency of credit card use among young people who can’t afford the payments is increasing rapidly.  It is estimated that over 80% of college seniors have some degree of debt due to credit card use.  With these statistics it makes sense that setting an age limit for credit card holders is on the horizon.  This new regulation is scheduled to be packaged with credit card act.

For many youth by the age of 21 they may be on their own, have a full time job or be in college far away from the financial security of their family. Providing their child with a credit card for many parents is a safety net when their child is far from home.  Credit cards do provide security; however not ensuring accurate spending limits and parental controls with that security can be detrimental for these students financial future.  The new laws will not prevent youth from having cards it will ensure that the proper safety mechanisms are in place prior to them getting approved.

Young Adults Still Have Options

Teens and young adults who do not qualify under the new regulations still have options for using credit cards. There are many teen friendly low limit and prepaid credit cards that are a safe alternative to the traditional high fee, high limit cards. It’s a fact that many credit card offers and preapproval gimmicks get into the hands of the wrong people.  Most teens have no understanding of the rules or fine print that comes with a credit card.  Many have been able to get approved because there was nothing to prevent this from happening.  Teens and young adults have long been a major target for credit card companies. The age limit for credit card holders seems long overdue.

Recent studies done by Nellie May, the student loan provider, indicates that more than 54% of freshman entering college carry a credit card. This figure increases to 92% by the second year of college.  The new imposed laws will begin to curb the aggressive credit card marketing to youth and hopefully reduce debt.  Credit cards do have advantages however even adults have found themselves in serious debt because of overuse or irresponsible spending.  A credit card before you are ready or able to afford it can be a fast track to debt.

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