College students may have a new protection against credit card scams. Rep. Louise Slaughter (D-N.Y.) introduced the Student Credit Card Protection Act last month that would set the cap for the available credit companies can offer students without a co-signer at 20 percent of their annual of their income, and parent co-signers would have to agree in writing to all credit increases. This bill would help to decrease number of credit card frauds and college students who are forced to declare bankruptcy every year.
Oftentimes, students can often be their own worst enemies. Although many understand the importance of maintaining a good credit history, far too many students accrue major credit card debt while still in school — in fact, close to one out of 10 undergraduates owe more than $7,000 in credit card debt, Slaughter said in a statement to the House of Representatives.
Building a solid credit history is important as students decide to make major purchases in the future, such as a home. Mistakes that students make during their college years will remain on their record for seven years. Students tend to make credit purchases out of convenience rather than necessary, which may get them in trouble when they have to pay that money back.
To establishing good credit and valuable budgeting skills, students should be sure to pay, if possible, more than the minimum balance on time for all credit cards and use them in moderation. Be weary of credit cards that charge high interest rates, late fees and annual fees, as these fees may increase your debt to the card company.
Do the research on credit cards before signing any agreements. Many students can tell horror stories about being ripped off by credit card companies that lure them in with attractive gifts and misleading deals. Don’t sign up for a credit card until you have read all the fine print about its rules and fully understand what you are getting into. Many credit card companies offer student deals that will ease you into the world of credit, but sometimes, even these plans can deceive you into signing outrageous agreements.
If this bill becomes a law, students will be able to turn to the federal government for help with credit card scams — but in the meantime, students should learn to make wise credit decisions.
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