Credit Reform

There are some changes being made on how credit card companies, Mastercard or Visa, approach college students and also some changes to how and when they can raise interest rates. It is designed to help consumers make more informed decisions on credit. Read the article below…

By ANNE FLAHERTY, Associated Press Writer Anne Flaherty, Associated Press Writer – Thu May 21, 5:54 am ET

WASHINGTON – It's an end of an era for the thousands of college students who rely on MasterCard or Visa to get them through tight times.
Under a new law awaiting President Barack Obama's signature, credit card companies will be prohibited from giving cards to people under 21 unless they can prove they have the means to repay the debt or a parent or guardian co-signs for the loan.

Congress passed the bill this week, and Obama was expected to sign it into law Friday. The changes will go into effect in nine months. "The hope is that when they spend, they'll spend under better terms and there'll be fewer traps for them," said Pedro de la Torre, a spokesman for Campus Progress, a progressive group in Washington that tracks issues affecting young people.

Congress is hoping to break a vicious cycle: A cardholder falls behind in paying the bill and watches helplessly as the interest rate spikes on the existing balance. Buried in higher rates and late fees, the cardholder spend less, which hurts local businesses.

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