Monday, June 15, 2009

Old enough to die for your country but not get a credit card?

I was reading an article about a new law passed in the US in the wake of the credit crisis. I have to say that I find some of its provisions inane and discriminatory. As part of the new law "Credit Card Accountability, Responsibility and Disclosure Act of 2009" students under 21 can't obtain a credit card without 1. income sufficient to independently pay their debts or 2. a parent or spouse co-signing on the card.

When I was in college, I got my first credit card based on my scholarships, grants, and work study. Oh, and I ran up debt. Not much, by today's standards. I ran up a little over $1000 in debt. I carried a balance from month to month, but always paid the minimum on time. So, what did I use this credit for? Did I go on irresponsible shopping sprees buying clothes and makeup? Nope. How about dining out constantly? Rarely in fact. I used my credit card to pay for my books and supplies for the first 2 years of college. After my second year, I simply stopped buying books. Yes, ladies and gentlemen, I was a history major who never bought a text book. Can you imagine? Frankly, I just couldn't afford them and found that I could maintain my 3.5 average without them. So, I skipped the purchase of text books. And, my debt held steady instead of continuing to increase.

When I graduated from college (with my credit card debt being the least of my concerns, by the way, that $1000 paled in comparison to the $30,000 I had in Stafford loans and maybe $17,000 from the Kiwanis club), I worked and paid off my creditors every month. I steadily worked down my balance so that before my wedding I had paid off all of my credit card debt and purchased my wedding dress myself. I didn't file bankruptcy, I didn't fail under the weight of the debt, I paid it down, month by month. I made a budget and stuck to it.

Now, had this law been in place then, I don't know if I would have been able to get a credit card. MemeBean's credit at the time was less than stellar due primarily to a tendency to forget to mail off the checks on time. Without the credit card, I likely would not have been able to afford to buy books even my first two years of college. My ability to get supplies and such would also have been in doubt. So, how then, are those students whose parents aren't able to foot their entire bill supposed to manage a college education. Mind you, during the time that I was accruing this debt, I worked 20 hours a week. Perhaps students like me should just work full time and do school part time? Or maybe ignore the grades and work and take classes full time? Frankly I'm not quite sure.

What I am sure of is that it is incomprehensible that you believe someone is old enough to fight and die for their country, but not old enough to obtain credit. Either at 18 you're an adult or you aren't. If you are, then credit facilities should be available. If you aren't then the selective service registration and enlistment age need to be adjusted... American lawmakers need to decide when does someone become an adult, because once they have they should be treated like one.

Oh, and the irony of this situation is that my credit is actually a hair better than El 3atal who got his first credit card several years into college and paid off his balances every month. Our combined credit allowed us to purchase houses and cars with very competitive interest rates and I am thankful that I had the opportunity to learn very early on about credit. It wasn't an easy thing to learn, but it made a significant difference in how I approach money and relate to it. I certainly hope we won't take that away from our kids.

Happy credit crunch!


At 11:07 AM , Blogger kinzi said...

Good post. I had a credit card at 18, and used it carefully.

Especially in light of recent discoveries that boy's brains aren't fully wired until after 21, I think that selective service, drinking and DRIVING should be delayed until then. Not practical,but it is a though it had been mulling over.

At 1:36 PM , Blogger MommaBean said...

Kinzi, I'm okay with that. Well, okay except the driving part. But if it's only boy brains, then it wouldn't apply to girls right? Somehow I think that wouldn't work... Seriously, though, I think the US just needs to make a decision one way or the other and make all rights available when you are an adult.

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At 2:14 AM , Blogger Ali Dahmash said...

Not everyone uses their credit cards wisely. CC are a trap that easily can leave you in debit for many years to come in the US. It is so easy to get one and if you pay your bills on time, the companies just maximize your credit limit which is crazy. We need to teach kids even at 21 that they just can't spend more than they earn. I have known people who are seriously in debit. That is the price of Capatilisim. Kids at 18 can make the choice to die for ones country or not but we should have the power to send the politician and their kids to war!

At 8:20 AM , Blogger MommaBean said...

Ali, indeed many people of ALL AGES use credit irresponsibly (as has become abundantly obvious). Tehre is no age limit for being misformed or foolish. But, making it harder for students to obtain credit is not likely to impact that problem. It just spreads the debt onto more parties. The CC companies love this because now they can come after mom or dad (after having raised the limits witout telling them) instead of being frced to have responsible lending practices for younger customers... We have been very good at letting them shift the risk of doing business unless it's a meaningless incentive to appropriate behavior :(.

And, certainly I think if more politicians were stationed in the war zone for the duration of the war, it would end mighty quickly!

At 8:51 AM , Blogger asoom said...

Great post on a very important issue. However I have to disagree with your stance I think the new laws might be just what we need. You were very responsible and wise about about your credit card but many young people aren't.

I was given a credit card at 16 but it was under my parents account and the rule was it's for gas and emergency and that's pretty much how I used it with the occasional splurge. When I realized in college that I could go ahead and open up my own credit card that my parents didn't have to see the bill or even know about it that's when I really started getting in trouble. I was also working a work study job and I kept convincing myself this or that was ok because I'm getting a paycheck but it turned into a vicious cycle of indulgence. I accumulated a debt that I couldn't handle and it was pretty stressful. I had to fess up to my parents to bail me out and they were not happy. The fact was I really did not even need that credit card in the first place. I know a lot of people that have similar stories.

In your case would it have been a problem with you to have a parent cosign for the card? Also you were working and you did have grants and loans so that may have counted as an income. Had this law been around when I was in college I think it would have saved me and others from being in a lot of trouble. Even if they did give me a credit card based on just income Im sure it wouldn't have been near the balance as the one they did give me.

It's true people of all ages can be irresponsible with credit, but I believe there is a correlation with irresponsibility and age. I'm way more responsible now with my credit card at 25 than I was at 19.


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