College Credit Card Rule Changes: Make a Plan Now

In a tradition seemingly as old as homecoming, credit card companies cover college campuses each fall, eager to tempt teenagers and twenty-somethings into applying for a card and potentially spending money they don’t have. 

But after this school year students heading to college could have a harder time getting charge cards once new credit card rules are in effect.

Here is what less 'extra credit' will mean for students.

Charging Times They Are a Changin'

With new credit card legislation set to take effect next year, credit will not be available to those less than 21 years old if they can’t provide proof that they can pay off their balance, for example by having an income or savings.

If there is no proof, a parent or other adult will be required to co-sign on the student’s account, putting their own credit in jeopardy if their child were to default. 

For these students, secured credit cards, which require a cash deposit in the amount of the credit limit you seek, may be the best option.

Unlike debit cards and prepaid credit cards, secured cards help you build up credit, since your activity on these accounts is reported to the credit bureaus.  However, a secured card still works like a credit card, meaning you’re still charged interest when you carry a balance, says Ken Lin of Credit Karma, a credit card information and education site.

Why the Changes Are Good

Using a credit card while in college has been encouraged since it can be used as a tool to help young spenders to learn financial responsibility. That is, if they can use it wisely, says Lin.