Comments | fclbrokle: Credit Cards for Young People

fclbrokle

Credit Cards for Young People

May 21, 2009 13:59

The recent congressional legislation on credit cards (expected to be signed by President Obama, including a totally unrelated measure to allow concealed handguns in national parks) limits advertising that credit card companies can do towards young people. It would require, for anyone under 21, either a parent cosigner or demonstration of ( Read more... )

Comments 35

ukelele May 21 2009, 19:38:27 UTC

Or, you know, parental consent. I get restricting access for people who may be young and stupid. I don't get the government restricting it when the parents are cool with not restricting it.

fclbrokle May 21 2009, 20:14:40 UTC

Hrm... I'm not sure if you're agreeing or disagreeing!

Currently, the law allows those under 18 to get credit cards with parent co-signers; that will no longer be the case after this law. (So on that, I suppose you agree.)

The law also makes parental consent (or an independent income) necessary for those between 18 and 21, which also aligns with your views (which is why I'm not sure where you stand). I mostly object to restricting credit cards for those in the 18-21 range because I think that constantly pushing up the age where children reach "adulthood" is a mistake that encourages less developed and mature adults.

lokiect May 21 2009, 21:23:12 UTC

augh, I've been not paying attention to the world much lately. I'm never happy seeing stuff about restricting young adults. And exactly how much of our grand financial crisis has to do with kids being irresponsible before they're 21? If it's predator credit cards to college students who don't know better, isn't restricting the students kind of the wrong side of the issue?

fclbrokle May 22 2009, 05:34:31 UTC

I think the theory is that it was caused by folks who once were 21.

Anyway, yeah.

dzm May 21 2009, 19:54:23 UTC

I've been vaguely paying attention to this bill, with some amount of dismay. Certainly in the current world new credit cards are very easy to get, and at least one person I know has pretty successfully played the game of rolling balances over to new cards with friendly promotional rates for a bit. It seems like it's pretty widely known that interest rates on credit cards are bad-to-terrible, you never ever want to miss a payment, and if you're in a position of being able to pay off 100% of your balance you're far better doing so. So where is the need for Congress to regulate that, if individuals are putting themselves in a position where they know their credit cards can screw them, the credit cards must not ( ... )

fclbrokle May 21 2009, 20:17:41 UTC

Agreed mostly, although the truth is that there are a lot of people who don't have basic knowledge of credit cards. I suspect that a lot don't realize how bad credit card rates are or just don't have a lot of the basic knowledge that we take for granted. When you're asking people who have little experience with financial instruments to evaluate the benefits of paying off an electric bill vs. paying a credit card bill, it becomes non-trivial. Also, terms and consequences are confusing and lots of people misunderstand them.

But yeah, I basically agreed. I think a law that advocated clearer disclosure and better education would've been a lot better.

easwaran May 21 2009, 21:48:14 UTC

In Washington DC I noticed some nice ads on the metro featuring a quiz like, "If you need $100 which of the following costs the least? A) Bouncing a check, B) not paying your credit card bill, C) getting a payday loan, D) (I don't really remember what all four options were", and then at the bottom it said what the average costs would be for all of these options. It looked like useful economic information for the people who need it most.

fclbrokle May 22 2009, 05:34:52 UTC

Ah, nice!

I have no point, I'm just saying.... gnibbles May 21 2009, 19:58:20 UTC

I've been too something* to let either bounced checks or missed payments happen to me. Even if I'd had a credit card since the age of 16, I still wouldn't know what to do if either occurred.

My parents** went from "You're a kid, you don't need banking-related skills or knowledge" to "You're an adult, now go get a bank account, credit card, and start being adult-like" in something like 3 months. It was singularly unhelpful.

The bill probably just reinforces that point of view. I dunno. It's like the drinking laws.

* something like a combination of wary and responsible, more on the side of paranoia than any real responsibility

** and by parents I mean my dad. My mom stayed mum about the whole thing.

Re: I have no point, I'm just saying.... fclbrokle May 21 2009, 20:18:10 UTC

Yup, I think we totally agree here. Of course, no law can protect against parents, but they can be encouraging.

schnerf May 21 2009, 19:58:32 UTC

We all want new credit card holders to be exactly as responsible as new drinkers on their 21st birthdays, right?

fclbrokle May 21 2009, 20:18:28 UTC

Oh gosh... don't even say that...

polynomial May 21 2009, 20:37:30 UTC

Regarding setting lower limits: People like med, business, or engineering students may need higher limits on credit cards for times between (reasonable-rate) loans. I certainly will appreciate a higher limit for when I'm trying to buy a nice suit for a job interview, or to cover moving expenses.

fclbrokle May 22 2009, 05:36:31 UTC

Sure, but that suit isn't going to cost you thousands of dollars; you don't need a crazy-good credit card for that. And it's a far sight better than disallowing credit cards altogether.