Parents, industry analysts favor CARD Act limitations on teens
The Credit Card Accountability, Responsibility and Disclosure Act prohibits adults under 21 from applying for credit without a co-signer or the financial means to repay the debt. For some parents, this comes as a relief as they try to teach their teens money management skills.
WTOK News in Mississippi says that steering young adults away from credit can give them the time to adopt more financial responsibility. The idea behind this part of the CARD Act is to prepare and educate teens on the consequences of owning a card in the future.
“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 eventually establish a good credit history, debt can result in credit score damage. Teens who have co-signers should read all terms and conditions prior to applying and accepting the responsibility. Repaying debt in a timely manner can help consumers avoid a loss of credit score points.