CARDing the credit companies

As of Feb. 22, some of the most prevalent predatory tactics credit card companies use to lure in college students were banned, at least in their current forms.

Last May, President Obama signed into law the Credit Card Accountability, Responsibility and Disclosure Act. This act contains new credit card rules and regulations intended to protect college students. It became enforceable Monday for most major banks.

While this act has been hailed by some as much-needed reform in a manipulative industry, others argue the new legislation infringes upon the right of the consumer to make his or her own financial decisions without the intervention of the government.

Along with following other prohibitions included in the Credit CARD Act, credit card companies can no longer distribute iPods and graphic tees on or near college campuses and events. This restriction eliminates an obviously predatory tactic credit card companies use to lure in customers to credit card contracts that are almost always more expensive than the original gift.

The act also stipulates that credit card companies no longer offer credit cards to people between the ages of 18 and 21 without a co-signer unless they can demonstrate financial independence.

This creates a considerable obstacle for college-age students to obtain a credit card on their own. While the intent of the legislation might be to encourage students to talk to their parents or legal guardians about credit cards, it eliminates the economic freedom most fiscal conservatives champion.

This is especially important in our current recession, as the economy needs any kind of economic movement available. According to law firm Morrison & Foerster, at least $12 billion a year is expected to cost the credit card industry in lost revenue.

Nevertheless, the Credit CARD Act is a necessary evil in order to curb in the rampant greedy tactics these companies employ to bait college students.

Most students are not financially savvy, much less attuned to the inner workings of the credit card industry. Variable interest rates, obscure transaction and transfer fees and stiff over-the-limit penalties cost students thousands of dollars. The financial burden these students face will follow them for years after college, all for one lousy T-shirt.

The Credit CARD Act limits the financial freedom of most college students, but given past trends, it isn’t surprising these reforms are needed.

Until students learn financial responsibility and self-discipline, these regulations will not be beneficial; they’ll be essential.