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Under 21? Getting a Credit Card Is About to Get Tougher

by Barbara Marquand

The new credit card reform rules ensure that you cannot get a credit card if you're under 21 unless you have a decent source of independent income or you get a parent to cosign on the account.

This new rule is among reforms included in the Credit Card Act of 2009. Concerned about the rising numbers of college students who graduate with troubling burdens of credit card debt, lawmakers clamped down on credit card marketers' efforts to lure in young people.

No More Credit Card Application Freebies

Besides the cosigner requirement, the new rules ban credit card companies from marketing cards on campus and from handing out free stuff to college students just for signing up. Sorry, no more free pizza or T-shirts for filling out credit card applications.

If you already have a card in your own name before the new rules go into effect, you can continue to maintain it yourself without a parent's involvement. But any new credit card accounts you apply for need either your parent's signature, or you must show proof of your own full-time income.

How do you move forward, now that the rules have changed? Follow these four tips:

1. Shop for the best student credit card deal.

Because your parents have to approve it, credit card companies have stepped up marketing efforts directed at them, and among the promoted student credit card features are those that give them greater control over the account, such as the ability to limit or monitor spending. But that doesn't mean you should sit on the sidelines. Work with your parents to shop for the best deal. Compare interest rates, annual fees, and reward programs.

2. Use your credit card wisely.

Don't use your credit card unless you know you'll have money to pay for the purchases when the bills arrive. Pay off your entire balance every month to avoid costly interest charges, and if that's not possible, pay it off as quickly as possible. Avoid paying just the minimum due each month.

3. Pay your credit card bills.

Pay your bills on time, and don't skip any payments. By cosigning, your parents assume liability if you don't pay your bills, so their credit score, along with yours, suffers if you skip or make late payments.

4. Keep your credit card balance low.

Don't max out the card. Maxing out credit cards--spending up to the credit limit--hurts credit scores. And until you get the balance paid down, you won't be able to use a maxed-out card, anyway.


Published 02/01/10 (Modified 07/09/14)

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