As with many things in life and politics, the new credit card legislation signed in May by President Barack Obama provides the hope for positive change along with the potential for some negative change.

The Credit Card Accountibility, Responsibility and Disclosure Act of 2009 raises the age of accountability for credit card usage from 18 to 21 years of age, effective February 22, 2010. From that day (Washington’s birthday, no less) forward, applicants 21 and under will require a co-signer on any new credit card account, unless they can prove that they have “independent means of repaying”. Additionally, presenting unsolicited pre-screened credit card offers to individuals under 21 will be prohibited, regardless of income or employment status.

The new rules regarding the 18-21 age group appear to be designed to “save irrresponsible students from themselves” by only allowing them to have credit cards with a parent (or other qualifying adult) co-signing.  The hope is that it will alleviate the negative situation that many young adults find themselves facing, excessive credit card debt early on in life. Back in April, we published a blog post aptly titled “Are Credit Cards the New Financial Aid?” which suggested the number of college students that had credit cards, as well as used them for charging school expenses, was alarmingly on the rise. But the projected downside of the legislation is that it may also make it more difficult for responsible young people to build credit.

The exact qualifications that the under-21 age group will have to provide as far as showing an “ability to repay” in order to avoid the requirement for a co-signer have yet to be defined.  The Federal Reserve Board is expected to create a preliminary version of what these requirements may be by fall of 2009, and will no doubt receive a significant amount of attention from lobbyists and the public prior to any final criteria is set.

Gone will be the days of free t-shirts and hats just for filling out that credit application at the college football game, and hopefully, in will be a less debt-ridden generation of educated individuals, if the new legislation works the way its creators intend for it to.

Readers, do you have any thoughts to share regarding the new legislation as it pertains to the 18-to-21 year old group? If so, please leave a comment!

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