New credit card law will benefit students
Liz Greene, The Oklahoma Daily
Last month, President Barack Obama signed the Credit Card Act of 2009, a bill that will regulate credit card companies from charging excessive fees and to limit interest rate increases.
The bill also restricts credit lines to $500 or 20 percent of income for people younger than 21.
The bill, scheduled to take effect in July 2010, is designed to protect consumers in debt from surprise fees resulting from paying bills online or by phone. Credit card companies will also have to provide an explanation and 45-day notice before any rates are increased.
Restrictions will also be placed on consumers. People under 21 trying to acquire a credit card must be able to prove they or their legal guardians can pay off the debt.
According to Campus Progress, a student-oriented political think tank, aggressive marketing by the card companies and multimillion-dollar agreements with universities have presented young people with ample opportunities to borrow money they can’t repay. College seniors with credit cards are graduating with an average balance of $4,100, a 41 percent increase in the past five years, the group says.
Steven Atkins, anthropology senior, said he recently paid off his credit card after being in debt for a few months.
“I was walking down the South Oval one day and saw a Bank of America stand giving out credit cards,” Atkins said. “I decided I needed to establish credit so I signed up. After receiving my free blanket, I went straight to the bars and ran up all my tabs. I guess I got a little carried away.”
OU press secretary Jay Doyle said OU offers several educational programs and counseling to help prevent credit card abuse and poor money management.
“OU’s Financial Education & Counseling Center provides students with free information about managing their finances,” Doyle said. There are also workshops for students to learn about budgeting and debt management, he said.
Doyle said more than half of incoming freshman are enrolled in the “Gateway to College Learning” course, a course available only to freshmen that provides information and resources for how to succeed in college. Each class includes a unit on financial issues faced by college students.
“Each [textbook] that instructors may choose has a chapter that focuses on financial success and the use of credit cards,” Doyle said.
Atkins said he has never heard of any educational programs offering financial advice, however.
“It sounds like a good idea,” Atkins said. “It is pretty poorly advertised though.”
OU currently holds a contract with Bank of America, allowing it exclusive rights to market its cards to students, staff and alumni.
“For many years, the University of Oklahoma has had an agreement in place with a single credit card company,” Doyle said. “By having an agreement in place, the university has a way to control marketing efforts.”
Doyle said the funds received from Bank of America are designated for campus improvements.
-The Associated Press contributed to this article.