A bill aimed at tackling credit card irresponsibility will go into effect at the end of February. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act provides specific measures designed to keep credit card companies from taking advantage of customers as well as provisions to prevent those who are unqualified from acquiring credit cards. The editorial board of The Miami Student strongly supports this new law for requiring both company and personal responsibility.
The law does not allow credit card companies to apply higher interest rates retroactively. So, when a company raises its rates, it can’t apply the higher rate to charges made before the change. The law does not allow companies which have raised rates in response to late payments to continue to charge a higher rate if the customer has paid on time for six months. Both these provisions target credit card company practices.
However, in addition to requiring honest, responsible behavior from companies, the law is taking steps to ensure consumers are responsible too. Those under 21 years of age will need a co-signer to open a credit card account. While students under that age may not want the accountability that accompanies parental oversight, especially for their first credit card, the benefits outweigh the costs. For fiscally responsible students, having a co-signer is, at worst, an annoyance. For students who would be at risk for fiscally irresponsible behavior, having a co-signer can protect them from acquiring insurmountable debt. Moreover, those who can prove they have a sufficient source of funding can apply for an exemption from the co-signer requirement. This provision will protect college students from opening credit cards they cannot support, as often happens with on-campus marketers offering free gimmicks.
This board applauds the law for targeting the age group when people first begin to become consumers of credit cards. This will help teach responsible credit practices and stem the development of debt. Miami University should consider encouraging the responsibility the law is designed to foster. Miami offers FIN 101: Personal Finance but could improve the course by making a Miami Plan class, perhaps as a fulfillment of a math requirement. Moreover, it could be a sprint course similar to one offered before the presidential election in which a different person teaches section of the class based upon their expertise. Furthermore, the Office of Student Financial Assistance could partner with the student credit union to offer seminars on personal finance as well.
Overall, the new law requires credit card companies to be transparent while still requiring personal accountability. The act makes people more aware of the fine print while also making companies cut down on the fine print.