Secured Credit Cards: New Credit Card Act Has Stricter Provisions

By William Finch on April 15, 2010, 6:33 am Posted in Finance News

The introduction of secured credit cards has left many adults, between the age of 18 and 21, wondering if they can start building their credit history before turning 21. According to new rules established by the Credit Act of 2009, anyone under 21 will need a co-signer if they want to get their personal credit card. Interestingly, the new rules are not clear on matters pertaining to someone who does not want a co-signer.

Who Is Eligible To Get Credit Card

This is precisely why financial institutions such as Bank of America are willing to disburse secure and unsecured credit cards to adults, under 21, without requiring a co-signer. Actually, such a decision is valid because bank authorities make their final decisions on FBR guidelines which dictate that the issuance of credit cards be based on the ability to pay. This ability to pay depends on information on consumer assets, income and any liabilities. Therefore, if the bank determines that a young adult, under the age of 21, is able to fulfill the obligations then it is entitled to issue secure or un-secure credit cards to those adults.

Popular Methods

Still, co-signing may be the easiest choice for many young adults who want to build their credit scores before pursuing their professional careers. Such co-signing agreements allow banks to issue credit cards based on the credit history of the co-signer and the bank’s ability to charge co-signer if the holder of credit card defaults. Another possible alternate is for a young adult is to become authorized users on their parent’s existing accounts which will enable them to get their transactions reported to credit bureaus.

Short Description

Building a strong credit has suddenly become one of the most important tasks for young adults. Getting credit card is certainly one of the better methods to build a good credit history. Although new credit card rules of 2009 have made it stricter to get secure or unsecured credit cards but there are still a variety of alternatives that young adults can chose. In fact, many reputable Banks are offering an entire range of credit cards to adults by solely relying on FBR criteria on who may be eligible for credit cards.

Related posts:

1. Credit Card Originations Down: Americans Find Ways To Secure Cards
2. Credit Card Reform: Consumer Makes Bank With New Restrictions
3. Secured Credit Cards: Using Them To Raise Your Credit Score
4. Credit Card Reform Act: Does This Actually Do Anything For Anybody
5. Credit Card Debt: Currency Conversion Fees Not In New Credit Card Act