New CARD Act a little unfair

[Wolf3]

I am in my 50's and practically no college student had a credit card when I was in college.   You generally had to have a history of full time employment to get a credit card.   No one heard of FICO back then.   Approval was primarily based on income.  Having more than 1 major card (VIsa, MC, Amex) was highly unusual. 

You don't need a cosigner if you have income.   Giving credit cards to young adults without income is predatory.

[Anonymous]

Just my luck. I want to get a credit card now of all times but in 5 more days I have to jump through just that many more hoops. Jeez, talk about annoying.

[Anonymous]

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ObscureLight wrote:
Yeah however there are a lot of young adults who gets paid in cash and aren't on the books meanwhile there are others who actually gets allowance.  They will have a much harder time to provide the financial information and even people who are on the books probably won't be able to show enough income to get even a feasible credit line.

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Hi ObscureLight! Welcome aboard.

Using your points above, an argument can be made that having undocumentable cash income is a lending risk to begin with, so how and why does a lender determine that you have the ability to pay? It can also be said that getting an allowance doesn't demonstrate YOUR ability to pay-- it speaks to the means of your parents/benefactors instead. Getting an allowance is a solid indicator of NOT being financially independent yet. Having independent income would statistically lessen the risk of lending to you. Otherwise, how is your financial dependence any different from just allowing yourself to be an AU on your parents' credit card(s), or getting a co-signer? In the end, the responsibility is really falling into their laps, and not yours if you're using their means as a path to credit for you.

While we may disagree, this is a great topic!

Message Edited by LilMirth on 02-17-2010 06:21 AM

[Uborrow-Upay]

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ObscureLight wrote: ..."Instead of increasing age limits and lowering standards on everything the government is practically increasing the degradation rate of this society.  They should just work on educating people instead."... 

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This is the USA.  Pandering to the lowest common denominator is our way of life here, and you get to pay for it, one way or the other, whether you want to or not.

Just as a reminder, this whole new credit card law thing started because of a family in CT who got ratejacked because they were late in paying their bill.  They didn't think that was fair.  After all, why should they have to pay the default rate just because they defaulted??

So, in the interest of fairness...now we all get to pay default rates (or at best, rates that were previously reserved for those with shaky credit).

Now, don't you feel better?  

[haulingthescoreup]

My big objection to this provision is that if the under-21 doesn't have the income (is in college full-time, for instance), the co-signer is vulnerable to misuse of the card. Also, it will affect the co-signer's credit report. For instance, if my kids were still at this age, and we decided that it would make sense for them to have a CC, I would have to open a JOINT account with each kid. This would lower my AAoA, and I'd have the new account ding and inquiry ding. Then I'd have to accept the risk that a roommate/ BF/ GF would get their hands on the cards and abuse them. If I'm a joint owner, guess what? I'll have to pay them off immediately, or risk having late payments and so forth blossom all over my reports.

As a mom, I would co-sign I guess, but I'd also close the cards the day after their 21st birthdays.

For those who commented about college students not having CC's back in the day, that's true. But graduates are facing a new world these days. They will have credit reports pulled for an apartment rental, for phone and utilities, for a cell phone, and quite possibly by a potential employer. You have to have a track record of responsible credit usage these days to qualify for good deals.

Message Edited by haulingthescoreup on 02-17-2010 04:20 AM

[monicar2009]

If my son applies for a cc before the 22nd, does he still need my written consent to get credit increases? or does that only go for whoever applies after the 22nd? He gets payed off the books.

[Anonymous]

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haulingthescoreup wrote:
My big objection to this provision is that if the under-21 doesn't have the income (is in college full-time, for instance), the co-signer is vulnerable to misuse of the card. Also, it will affect the co-signer's credit report. For instance, if my kids were still at this age, and we decided that it would make sense for them to have a CC, I would have to open a JOINT account with each kid. This would lower my AAoA, and I'd have the new account ding and inquiry ding. Then I'd have to accept the risk that a roommate/ BF/ GF would get their hands on the cards and abuse them. If I'm a joint owner, guess what? I'll have to pay them off immediately, or risk having late payments and so forth blossom all over my reports.

As a mom, I would co-sign I guess, but I'd also close the cards the day after their 21st birthdays.

For those who commented about college students not having CC's back in the day, that's true. But graduates are facing a new world these days. They will have credit reports pulled for an apartment rental, for phone and utilities, for a cell phone, and quite possibly by a potential employer. You have to have a track record of responsible credit usage these days to qualify for good deals.

It'll be interesting to see if the secured card option will offer a foot in the credit door for students who are still completely financially dependent. I'm thinking that a secured credit card would satisfy the "ability to pay" requirement-- the credit line is secured with their savings deposit, after all. This way, a dependent student can establish credit on their own, without a co-signer.

That's a very good point about the risk to the co-signer. I think I'd much prefer to add my student as an AU to an existing card (that would report to their credit reports), so I could at least avoid the hits for new credit & lowering my AAoA. That really wouldn't do much for the necessity of having to watch that account like a hawk, though.

Note to self: Figure out which credit card I like the least NOW, and hang on to it for the children, LOL!

[Anonymous]

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@Uborrow-Upay wrote:

Just as a reminder, this whole new credit card law thing started because of a family in CT who got ratejacked because they were late in paying their bill.  They didn't think that was fair.  After all, why should they have to pay the default rate just because they defaulted??

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These companies want to charge people $40 for being a day late, then throw a 25% APR on top of it. If you average a $500 balance that's another $75 a year above what you would be paying on a non-default 10% APR.

Essentially, that's charging someone $115 for being a day late.

Fairness has never been a part of banking, but things like this are ridiculous. 

[laz98]

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@Anonymous wrote:

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@Uborrow-Upay wrote:

Just as a reminder, this whole new credit card law thing started because of a family in CT who got ratejacked because they were late in paying their bill.  They didn't think that was fair.  After all, why should they have to pay the default rate just because they defaulted??

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These companies want to charge people $40 for being a day late, then throw a 25% APR on top of it. If you average a $500 balance that's another $75 a year above what you would be paying on a non-default 10% APR.

Essentially, that's charging someone $115 for being a day late.

Fairness has never been a part of banking, but things like this are ridiculous. 

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maybe people will understand the importance of paying their bills on time this way.

[Anonymous]

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@laz98 wrote:

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@Anonymous wrote:

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@Uborrow-Upay wrote:

Just as a reminder, this whole new credit card law thing started because of a family in CT who got ratejacked because they were late in paying their bill.  They didn't think that was fair.  After all, why should they have to pay the default rate just because they defaulted??

---

These companies want to charge people $40 for being a day late, then throw a 25% APR on top of it. If you average a $500 balance that's another $75 a year above what you would be paying on a non-default 10% APR.

Essentially, that's charging someone $115 for being a day late.

Fairness has never been a part of banking, but things like this are ridiculous. 

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maybe people will understand the importance of paying their bills on time this way.

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I'd say that the amount of people that don't think of paying their bills on time as important is insignificant. Of course it's important, but what must be understood is that sometimes (oftentimes for some people), things just don't work like that.

For example, I moved a couple of years ago and ended up changing jobs shortly after I did. I had money to pay rent, other bills, and for food. The money to cover my credit cards just wasn't there...

...for about two days. 

During my week of training I made no money, so my payments had to slide. As a result I ended up paying over $200 in late fees, plus all my rates went up to ~23%. One of them, thinking about it now, went up to 33%. 

My fault? Yes. In the same way that putting spikes on someones desk and seeing them impale their face while subsequently sneezing is their fault. You shouldn't have sneezed. I don't care about your allergies. No, that's not a bag of ragweed in my pocket.

The game has been rigged in the CCC's favor for decades and it's about time there was some REAL oversight on this issue. The entirety of the banking industry and all of its regulations need to be blown up, but that will never happen. This is about as close as we're gonna get.