Congress doesn’t trust teenagers
Tucked away in the “Credit Cardholders’ Bill of Rights” approved by Congress is a clause aimed at protecting those who act irresponsibly at the expense of those who follow the rules. Actually, most of the bill does that. But here I am talking about the bill’s crackdown on credit extended to teenagers and young adults.
Consumers under the age of 21 will be required to have a co-signor, or be able to prove they have independent means of paying their bills. It also limits prescreened offers of credit to young consumers, and places limits on credit card marketing to students.
The bill is clearly intended to strike back at evil credit card companies and banks, which apparently can’t make a profit despite their predatory practices. By restricting the ability to do business with those under 21, credit companies will find it even harder to return to the black.
But the bill is also an insult to college students, the nation’s best and brightest, who are now being told by Congress that they aren’t smart enough to be trusted with a Visa card. Those who are old enough to drive, live on their own, or serve in the military aren’t considered mature enough to say, “charge it.” Responsible young people will be penalized because of the actions of others who used credit irresponsibly.
We all know stories about college students running up bills by over-charging on newly acquired plastic. I suspect those so pre-disposed would have demonstrated poor spending habits later in life anyway.
For me, the acquisition of credit was a valuable lesson I was fortunate to receive. Like many boys, I had a paper route, necessitating a checking account at the age of ten. When I was fourteen, I applied for and received a Dayton/Target credit card. The account had a fifty dollar limit, which I often maxed out. But it taught me how to spend wisely and pay my bills on time, with the dreaded interest rate experience included for good measure.
A couple of years later, I received a Sears credit card. This one had a whopping two hundred dollar limit, which I handled with care. During college I worked at Sears briefly and found I was the only employee in the catalog department who actually had a Sears card. I was told Sears was very selective about who received credit, and even the assistant manager had been deemed unworthy by the Sears credit people.
That was a long time ago, and I no longer have a Dayton’s or Sears credit card. But I am still proud to have a credit history dating back to my teenage years. I wish more of today’s youth could have that experience. But Congress has just deemed them untrustworthy.
The question is not whether college-age people are “smart enough”; the question is whether it’s a good idea to leave them at the mercy of an increasingly predatory and underhanded “easy credit” industry. I suggest that things were quite a bit different back in the days when you and I were getting those first credit cards (for me it was Conoco card and Brandeis, an Omaha department store). Now the easy-credit industry can and does jack up a customer’s interest rate pretty much whenever it feels like it; it has shortened the “grace period” for making payments; it has hidden fees in the extremely fine, dense, gray print; it has demonstrated that it sees its customers as prey. Since there’s no reason in the world to expect that the industry will police itself, it becomes the rightful duty of society to do so. Especially since these young people are amassing student debt far exceeding that which most of our generation entered the working world with, it is callous to leave them to the nonexistent mercies of predatory lenders.
As the parent of a (responsible) college student, I say we owe it to the upcoming generation to watch out for them. Let them feel insulted. Methinks they’ll thank us for it when they’re writing checks to pay off their student loans!
WJR
Why is it a bad idea to have a co-signer or proof that they can pay bills? That makes so much sense. I’m not sure I understand why you find fault with this notion.
Tom: When someone is 18 or 19, they have full adult rights to do just about anything else in America. I believe what should happen is that young people should be phased in as beginners – give them a credit line of a few hundred dollars (some amount that won’t cripple them for life) or so just to see how they do with it. If they prove responsible, their credit card limit can increase with time. That is what happened with me, and it taught me discipline in a tangible way. If one has a co-signer, that is just a safety net or parachute which doesn’t teach the same lesson.