Americans older than the age of twenty five may recall acquiring their first credit card through a parent's mailbox unsolicited around age 18, enabling them to be a credit card holder and to incur any debt associated with it. In the past, young adults received credit cards having no credit history and no proof of income. As late as 2009, it was very easy for people under the age of 21 to be approved for credit cards upon simple application.
Controversy surrounding credit card use by those under 21 has received attention as more and more Americans are haunted by bad credit. A recent study concluded that 9 out of 10 students attending college admitted to charging school expenses to their credit cards. The trend remains as school costs continue to rise while teen and college employment remains on the decline. College students once often fell victim to incentives used to entice them to sign up for cards. While arguably a great way to build good credit, credit card possession came at too high a price for many young people who spent more than they could pay back on school expenses, cell phone bills, cars, dinners out, and other luxury items. For many, this has resulted in severely damaged credit reports, low FICO scores, consequent inability to get home, auto, or business loans even after they've out of college, responsible, and ready. Recently, the Credit Card Accountability, Responsibility and Disclosure (CARD) Act was approved by the house to protect current young adults from this situation.
New regulations state that credit card issuers must now verify proof of income or otherwise require a co-signer before issuing a credit card to consumers under age 21, credit card issuers cannot send prescreened card offers to those under 21 unless they have consented to receive offers, card issuers cannot raise the credit limit on an account for persons under 21 with a co-signer without written permission from the co-signer and lastly, that Credit card issuers are prohibited from providing free items in exchange for applications when marketing to students on or near campus. For many in their late 20's, early 30's, and even 40's this regulation has come too late.