The Credit Card Accountability, Responsibility and Disclosure Act of 2009 was put into effect on Feb. 22, and while it will enforce many new stipulations, its main focuses are to protect young consumers and make credit card use and payments easier and better understood by the general public. Kellen Jenkins/ The Bulletin

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 was put into effect on Feb. 22, and while it will enforce many new stipulations, its main focuses are to protect young consumers and make credit card use and payments easier and better understood by the general public.

“For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs,” President Barak Obama wrote in a formal statement following the enactment of the bill. “But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable.”

One major provision of the act requires persons under the age of 21 to have a cosigner who is responsible for the cardholder’s debt, should they accumulate any. That cosigner must also agree to any increase in spending limits.

“No increase may be made in the amount of credit authorized to be extended under a credit card account for which a parent, legal guardian, or spouse of the consumer, or any other individual has assumed joint liability for debts incurred by the consumer in connection with the account before the consumer attains the age of 21, unless that parent, guardian, or spouse approves in writing, and assumes joint liability for, such increase,” the act reads.

The Act also prohibits credit card companies from offering enticements such as free giveaways for signing up for a credit card on college campuses or at college-sponsored events.

Rob Catlett, economics professor at Emporia State, said that while he agrees with some stipulations of the act, the age restriction is not one of them. The age provision affects most traditional college students, and Catlett said that 18 years of age rather than 21 would be a better age restriction.

“Restricting the flow of credit to college student is treating them in kind of a childish way,” Catlett said. “If I were a student I’d feel uncomfortable with that.”

The Act is aimed at protecting students from accumulating bad credit through their college years, which Catlett said is a problem for some students, but not the majority.

“I’ve had enough students who have visited with me because they’ve gotten way in over their heads and it makes it challenging to focus on their academic work when they’re in serious financial trouble because they’ve overspent,” Catlett said. That’s a problem, but it’s not a problem with the general student population. I think most students handle their credit wisely.”

In fact, the average balance is $452 for the 35 percent of college students who did not pay their credit card balance in full each month in 2008, an amount that is down from 2007 by 19 percent. It is approximately one-third the amount of the average balance of non-students, according to the Student Monitor annual financial services study.

Catlett said that this particular provision “protects consumers a little too much.”

“It will help to have some people who are not in a position to repay that, to keep them out of trouble,” Catlett said. “But it also is problematic in terms of establishing credit and showing one can use it responsibly.”

Laura Bosiljevac, freshman biology major, agrees with the age provision because of personal experience. Multiple times, she said she has overdrawn on her debit card without realizing it, for which she has been charged a $35 fee. While she acknowledged that she should have been more careful, she said it is still a problem that she thinks could be partially alleviated by the age provision.

“I’m already afraid to get a credit card, but you have to build up credit somehow,” Bosiljevac said. “But a lot of college students, having the low income jobs that they do, I don’t think they need to go out and be spending senseless money because our economy is already in trouble the way it is.”

In addition to young consumer protection, the act also prohibits credit card companies from increasing rates retroactively or within the first year an account is opened, or to use over-limit fee traps. Also, it is now required that they send consumers ample notifications of any changes to the terms of the card and have clear payment dates and times.

“There are many things that got tightened up that really were long overdue because the information that was coming from credit card companies was so detailed that few people could really understand it,” Catlett said. “And this effectively reigned in some of those practices that were I think deceptive, predatory, and enriching of credit card companies at peoples’ expense that wouldn’t realistically be able to understand without that guidance.”

Obama said that while the new rules are a step in the right direction, the consumers remain responsible for payments.

“These new rules don’t absolve consumers of their obligation to pay their bills, but they finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions,” Obama said.

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