Graphic by Nick Marley/Daily Titan Photo Editor

The Credit Card Accountability, Responsibility and Disclosure Act of 2009, signed into law by President Obama May 22, 2009, was established to create “fair and transparent practices” between the creditor and the cardholder. Since the average college undergraduate has an outstanding balance of $3,173 on their credit cards according to creditcards.com, the act has devoted an entire section to establishing regulations for young adults in order to keep them from accruing a debt they can’t pay off.

Title III of the legislation, the Protection of Young Consumers, has developed a new criteria for applicants under 21 years old and will be effective as of Feb. 22.

“Before a creditor may even issue a credit card to an individual under 21, the individual must prove his or her ability to repay the debt or cosign the application with a parent or individual with such means,” said Clare Morgan, Vice President of Marketing at nFinanSe, a pre-paid card company.

For many Cal State Fullerton students who are under 21, this could prove to be a burden, as many rely on credit cards to pay for their tuition, books and other school expenses.

Current credit card owners will not be affected by Title III of the legislation, only future applicants, said Morgan.

“I know a lot of students use credit cards for their tuition and books,” said Jankee Pandya, a 18-year-old psychology major. “It does make it harder for them.”

The Credit Card Act of 2009 also contains legislation that will apply to all cardholders, regardless of age.

“There are some really strong points,” said Betty Chavis, chair of the department of accounting. “Overall, it’s going to help consumers with interest charges, but there are fees that will be added on, or other upfront costs. I don’t think it’s going to lower costs but it will help keep consumers from getting in debt they can’t pay off.”

The Act stipulates that creditors inform their customers of an APR increase 45 days prior, puts a freeze on interest rates and fees on canceled cards, requires statements to be mailed 21 days prior to the payment due date and moderates the sales methods used by banks on university campuses

“Credit card companies are going to have to stay 1000 feet away from college campuses if they are going to use free things to entice students to sign up,” said Chavis.

It also includes a recommendation from Congress that universities and college campuses should limit the amount of creditors soliciting to students on campus and that students should be offered credit card and debt counseling sessions.

“I think this is good because a lot of people under 21 don’t have a job and they use credit cards anyway,” said Trya Nguyen, a 22-year-old business major.

For those who rely on credit cards during rough economic times, there are some alternatives to consider.

“There are Pell Grants and Cal Grants that help us to pay tuition, so a credit card is not always necessary,” said Nguyen.

Students may also apply for federal loans or enroll in payment plan options offered by the university.

As for day-to-day expenses, individuals under 21 may have to revert back to only spending the money they have, whether it be in the form of a debit card, a reloadable prepaid card, or cash.

“I’m a firm believer that you should be able to pay with cash,” said Chavis. “Students should have money in the bank and use the school’s EFT program.”