Credit card debts and young adults

Credit cards offer the holder flexibility in spending and increased purchasing power. However, this also brings the responsibility for managing spending and ensuring that bills are paid on time. Many credit card companies market their cards to young adults and unfortunately, without the right knowledge, it can be easy for young adults to begin a slippery slope towards mounting debt. Parents of young adults must take the time to explain both the benefits as well as disadvantages of spending with credit to ensure that their children have a good financial start.

The introduction of the Credit card Act of 2009 has seen many restrictions on credit cards as they relate to young adults. These regulations are long overdue and help to protect young people from overzealous marketing directed at their target demographic. Young adults have long been an ideal market for credit card companies and before the establishment of the Card Act, there were not many sanctions in place to protect young people from predatory marketing.

Some of the changes put into place with the Credit Card Act of 2009 stipulate that young adults wishing to open a credit card account must show proof of income or an ability to repay the debt. An alternate choice is for a parent or other guardian to act as a cosigner on the card to allow them to open the account in their own name. This is a major benefit to both parents and young adults alike as it teaches that the freedom of spending must also be accompanied by the ability to repay the debt, a lesson many adults have yet to learn. In addition, if the parent’s name is on the card as a co-signer, there is more incentive for them to ensure that their children make the payments on time and do not incur a higher bill than they are able to repay.

Another stipulation under the Credit card Act states that card issuers are prohibited from offering free gifts to students as an incentive for signing up for credit card offers. In addition, card company representatives must maintain a set distance from college campuses. These new regulations under the law are a great step in protecting the interests of college age youngsters. Many card companies are aware of the draw of easy money and as such, college students make an easy target. In addition, a young adult who signs up for a card at a young age is most likely to remain with that company for a long period of time. These new sanctions allow young adults to make these major financial decisions when they are older or at least with the assistance of an older and wiser parent.

The Card Act of 2009 sets boundaries for how credit card companies interact with young adults and provides much needed protection from unscrupulous marketing practices. Parents still bear the major burden of explaining the risks and rewards of credit and making sure their children are using credit responsibly. In the end, the new laws help young adults to realize that the benefits of spending with credit must be accompanied with the responsibility of repayment, a valuable lesson to learn at an early age.

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