Credit Cards for Young People
The recent congressional legislation on credit cards (expected to be signed by President Obama, including a totally unrelated measure to allow concealed handguns in national parks) limits advertising that credit card companies can do towards young people. It would require, for anyone under 21, either a parent cosigner or demonstration of independent income; it would ban credit cards for anyone under the age of 18.

The intent is obvious: don't get young people hooked on credit; let them wait to start using cards until they're more responsible. I wonder, however, if the true result will be inexperienced credit card users who do damage to their long-term financial prospects when they have the resources (and credit lines) to do so. I first got a checking account when I was 12 and a credit card when I was 16. I learned a lot from my experiences then. I did bounce a few checks, and quickly learned how much trouble it gets you in (and how much money it costs), such that I now keep a carefully balanced checkbook. I had the chance to accidentally miss a few payments when my spending (and thus the interest charged) was not too high, learning the consequences, how to deal with it, and how to avoid it happening again.

I claim that credit cards can be a valuable learning tool for young people; now they'll have to first get cards while they're also dealing with numerous other transitions and stresses in their life. It may also adversely affect those who are not financially savvy, causing greater harm to those who grew up in families without credit cards or other common financial tools.

Although I understand the need to police credit card debt, I think this bill is a mistake, one that will result in less informed consumers. Would we not be better off by requiring credit card companies to give very low limits to young cardholders, and requiring them to deliver educational materials to them?