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CARD Act restrictions on teens may encourage financial responsibility
By Marvin Milner on Aug 27th, 2010
Many parents don't mind allowing their teens to tote around their own credit cards, but as WTOK News reports, giving young adults their own lines of credit may be more trouble than it's worth.
Under the Credit Card Accountability, Responsibility and Disclosure Act, teens can no longer apply for credit cards unless they are 21 or older, have a co-signer or the financial means to repay the debt. Several parents and industry analysts alike believe that this restriction is a move in the right direction toward financial responsibility for young adults.
"If they're going to sign that contract, that they understand what they're signing. Make sure to think about the pros and cons of it," credit counselor Chris Burford told the television station.
While it is important for young adults to build a credit history, it is just as important for them to understand the consequences of holding a credit card as well. Those who are already struggling with debt could consider consolidation. By combining debt and taking out a loan with a smaller interest rate, borrowers can lower their monthly payments.
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