Earlier this week I brought up the proposal in the Senate-passed CARD Act (Credit Card Accountability, Responsibility and Disclosure Act) which would require adults under the age of 21 to get a cosigner in order to get a credit card (or prove significant income, whatever that means — don’t we have to do that anyway?). I’m not the only one who had an opinion on this particular feature of the new legislation. Here is a taste of what other people are saying about the proposal:
Either you are a legal adult at 18 or you are not. If you are considered old enough to fight and die for this country, you should be considered old enough to not have to jump through a bunch of hoops to get a credit card.
If you don’t think 18 is mature enough to obtain a credit card or even to consumer alcohol then we should be raising the legal adult age to 21, not placing a bunch of government restrictions, exemptions, and regulations. In addition, it appears card holders will need co-signer permission before increasing credit limit and making other changes. Mommy, Daddy, please let me get a credit card… please!
Independent Beginnings: Attention Students: You are Gonna Need Permission to Open that Credit Card
Traditionally, eighteen-year-old freshman college students have been immediately attacked by credit card offers as soon as they start school. Lacking education on how credit cards work, many of these students jump at the opportunity of opening one of these “magic” cards and end up falling further and further into debt. It will be interesting to see how this will change now that students under twenty-one have to get their parents to cosign with them (or another adult over twenty-one). Will this allow students more time to learn about how credit cards work before amassing huge amounts of debt on them? Or, will this have little effect whatsoever? I guess it would largely depend on the student’s parents’ views on credit card usage.
No Debt Plan: Credit Card Act Passes Senate
Then again it always makes me nervous when government gets involved with business affairs. Yes, the credit card industry has cost millions of Americans billions of dollars. The changes to the age limits makes me uncomfortable. I know that college students have been ignorant on credit card use, but what about the ones who are responsible? And why should the Bank of Mom and Dad have to foot the bill if the student is irresponsible? And what happened to building up a credit history as soon as possible?
(Note: No Debt Plan’s article also has a nice explanation of the difference in the House version of the bill, which doesn’t have the same “under 21” restriction as the Senate version.)
Bad Money Advice: Credit Cards and Our Nation of Children
American laws are ambiguous about when adulthood starts. For many purposes, 18 is the magic number. At that at age you can vote, get married, join the armed forces, and, with the looming exception of credit cards, enter into binding contracts including a car loan or a mortgage…
This inconsistency bothers me, but not as much as the worrying general trend of increasing the age at which we consider people to be grown-ups. And that is just part of an even larger trend, the growing reluctance to treat anybody as a grown-up.
I highly encourage you to check out each of this articles, and pay special attention to the discussion going on in the comments for each. This is getting to be a hot topic, and I say “Good!” It’s about time we talked about young people and debt! I really hope that this under-21 restriction doesn’t make it into the final version of the bill, but I am somewhat glad that it was there to spur discussion.
I’m not a big fan of protecting people from themselves. You know that bumper sticker that says “Let’s just remove all the safety labels in the world and let stupidity take its course?” Well, I’m not quite that harsh, but I think that people only need protection from the things they can’t protect themselves from. I can’t protect myself from a doctor while I’m under anesthesia, but that’s why we have laws and medical malpractice suits. I can’t protect myself from poisoned food and drugs, but that’s why we have the Food and Drug Administration. But I can protect myself from overspending and living outside my means.
As I’ve said, I don’t have a problem with most of the measures in the CARD Act. There are some shady practices in there that are hard for people to protect themselves from, since the credit card companies make all the rules. So go ahead and regulate those things… but don’t tell me I’m suddenly an adult who can handle a credit card at 21 instead of 18.
Sure, I’m a lot better about money and credit cards now, at age 22, than I was at 18 or 19. But that’s because I had the opportunity to screw up. I was 19 when I got that first credit card, and within six months I had run up a balance, because I was living outside my means. In my case, living outside my means meant “trying to go to an expensive film school” instead of “buying Playstations, HD TVs, and drinking every weekend,” but it was still living outside my means. But I dug myself out of that hole and now I use my credit card to earn rewards – paying off the full balance every month. The difference in those three years was experience and education, not some magic maturity that happened when I hit the legal drinking age.