Will the New Credit Card Rules Benefit Students?

by Jason on March 23, 2010

The new credit card rules that President Barack Obama came up with are supposed to eradicate many ill effects of credit cards that earlier created nuances in the life of debtors.

But the question is whether the new credit card information will be fruitful enough for those who are in college or below 21years old?

Glancing through the primary changes of the new law, you can be satisfied with the manner it deals with the earlier prevalent ill practices.

No doubt a change can be noted in the areas of rapid increase of interest rates on outstanding balances, the problem of double-cycle billing and carry-over balance billing.

And the good news is that there are changes in the provision for the college students too.

Although previously the rules were pretty flexible and you could have collected lines from banks or lenders at easy terms, now it will not be so.

The new regulation binds you in certain chains for your own benefit. Take a look at some of the new credit card information:

Lower Credit Limits

Earlier the credit cards that were available did not offer the students any special privileges of low interest. It was not given considering the paying ability of the student including those attending university online.

Thus you may end up with a huge loan which becomes almost impossible to pay back. What resulted was that you are under the clutches of debt before you leave college.

With the new law there is a restriction on your credit limit. If you are under the age of 21, you need to show a steady income source. You should also make sure to have the signature of a parent in your form.

Expense Limits

It is true that the loans are very helpful for the students to meet their regular expenses. But it has been observed that due to the imbalanced utilization of the resources they often get into debt problems. The rule will put a check on the students’ credit card expense level.

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Improved Credit Scores

Since these new rules will help lower your debt level, your credit score will improve. You can look forward to applying for a loan if you need to without any second thought.

The rule discourages students from having many credit cards open at one time, which leads you to multiple debts. If you have fewer credit cards, you will generally have a greater knowledge of your expenses. This can help you to reduce the amount of debt you carry and keep a check on it.

Finally, if you can manage to get some low interest credit cards after careful market research you can enjoy some extra benefits too.

At the primary level the new rules may seem to be too restricting and full of limitations.

According to many, it does not solve the problem altogether because it does not apply to the amount you have already spent. It may also have a negative approach as it may result in an increased dependency on payday lenders and pawnshops. However, if you follow the new rules it is definitely going to bring a change.

Being debt free after college, having a good credit score and balanced credit card behavior will yield a good result for a lifetime.  Your small initiative now may make you rich someday if are your prudent in your decisions. It is all about starting well at some point.

This has been a guest post by Nina Roberts – a financial content writer and blogger working with Oak View Law Group.

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