The last part of the Credit Card Accountability, Responsibility and Disclosure Act now prohibits young adults under 21 from applying for credit without an adult co-signer or the financial means to repay the debt. The goal of the new legislation is to keep issuers off of college campuses and steer young adults away from credit score damage. However, financial analysts now say that it may not be enough protection.
According to Investopedia, a personal finance news site, the legislation can only do so much to direct young adults away from debt. Like all consumers, these card holders are just as vulnerable to debt if they do not adopt a sense of financial responsibility, analysts say.
Over-the-limit fees and capped late fees are just a few of the conditions of credit card contracts that have been eliminated for young shoppers, but Investopedia notes that the key to avoiding debt in the future is to stay on top of monthly payments.
While it is important for consumers to start building a payment history early, reckless spending with plastic can result in credit score damage. This can make it more difficult for borrowers to receive approval for loans later in life.