How the New Credit Card Bill Will Affect Young Spenders

Necessary protection or undue burden?

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Offers from "bottom feeders." Another potential side effect of the bill is that credit could be harder to get once young people turn 21. "The bill reduces the opportunity for credit card issuers to cover their own costs on certain higher-risk categories," says David John, senior research fellow at the Heritage Foundation, a conservative policy think tank. First-time borrowers fall into that high-risk category. As a result, issuers may conclude that it's not worth it to send out as many offers and approve as many people as they did before. "A number of the big-name issuers are going to be more reluctant to send a credit card," he says. John says first-time borrowers should be wary of less known issuers that charge lofty fees and will try to court young customers. "They're going to get offers from essentially bottom feeders," John says.

Parents. Cosigners—such as parents—aren't off the hook if their child rings up a large amount of debt and falls behind. "The bank considers the young person and the parent to be equal players. Now you have two people on hook to the payment rather than just one," says Ulzheimer.

Sufficient income? If a young person can't get a cosigner on a credit card, the only alternative is finding a job that pays sufficient income. But what exactly does "sufficient" mean? The law is not entirely clear. The bill states that the underage consumer must submit "an application indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account." It doesn't translate "independent means." John says that it will ultimately be up to the credit card issuers to decide if the consumer has enough income to receive a card.