New Credit Laws Offer Protection For Young Borrowers

If you have ever been on a college campus, you have seen them. No, I’m not talking about the coeds, I’m talking about the bank representatives peddling credit card offers for a free t-shirt. It makes sense, after all, who is more financially stable than an incoming college student? Wait a minute, is that serious? Unfortunately it is, however with the credit crisis in America, a number of reforms have been put in place not just to make lenders more responsible, but also to protect consumers from some of the salacious lending practices of the largest lending institutions in the country.

The Federal Reserve approved new rules for credit card companies late last year which offer protection for some of the youngest borrowers out there, college students. In light of the events happening on college campuses across the country, the Federal Reserve stepped in to approve new protections. While these changes don’t go into effect until February 22, 2010, they will likely take every opportunity possible to prey on young borrowers before that deadline.

According to these new Federal Reserve standards, in order for a person under the age of 21 to obtain a credit card, they need to have one of two things happen. First, they will be approved for the card if they can show that they have the financial resources to make payments on any purchases that could be made. Secondly, institutions can issue cards to individuals under the age of 21 if they can find someone to co-sign for the card.

These protections alone stand to help young people against the predatory lending practices of many credit card companies. For many young people, these cards are the first step to a disastrous financial future. With balances compounding interest over a college career, which can stretch from four to ten years when including graduate and post-graduate degrees, even responsible young people have the potential of racking up huge amounts of debt that cripple them for years to come.

The good news is that these likely are not the last of the changes to the rules for credit card companies. By August, the Federal Reserve will decide on how to implement two of the trickier, more time consuming parts of the new law: the requirements that penalty fees be “reasonable and proportional,” and that credit card companies that have raised consumer’s interest rates since January 1, 2009, must re-evaluate the rates to see if they could be reduced every six months.

Many people who have gotten into financial trouble at the hand of credit card companies have turned to debt settlement programs offer debt help them navigate these deep, difficult waters. A debt settlement company settles your debt with a credit card company for less than the amount that you owe. Greenshield Financial Services is a Financial Health Management Company that specializes in a debt settlement program as alternatives to debt relief, debt help, and bankruptcy to help you learn how to get out of debt.