Last Spring, as Congress and the President considered the rules that would go into the CARD Act, one concern was to prevent banks from targeting young people and enticing them into debt through student credit cards.

Credit card companies often set up on college campuses, offering incentives to college students to “sign up today.” These were everything from teddy bears to backpacks to pizza coupons, and students were eagerly accepting the gifts.

Others, including high school students, received seemingly attractive student credit card offers in the mail.

Sadly, many of those credit card accounts were what are generally known as “fee harvester” cards. When a consumer makes application and is accepted for such a card, he or she is hit with a hefty bill for “fees” before ever using the card. These can include application fees, activation fees, monthly fees, and more.

The students, in their eagerness to own a student credit card, didn’t stop to read the fine print.

In addition, widespread concern over growing debt loads among youth led these lawmakers to restrict credit availability to young people.

When the CARD Act’s provisions go into effect in February, students will be required to have either a job or a co-signer in order to receive a credit card. In addition, the credit limit on such cards will be severely restricted.

Unfortunately, legislation such as this has a dark side for students.

The fact is, upon graduation students who have established credit will have a far easier time entering the workplace, renting a home, and buying a car. Rather than avoid using a credit card during these school years, students should establishing a record of responsible money management through wise student credit card usage – and thus building high credit scores.

The first step is to ignore the solicitations – either in person or by mail – and do the research to find a card with good rates and terms.

Next is to do it now – before February rolls around and the opportunity is lost.

Once you have the card, use it sparingly, but use it. Make it a point never to let your statement show a balance in excess of 30% of your available credit. If you’ve gotten a card with a $200 limit that means you won’t be buying much – but also means you should be able to pay off the balance each time the statement arrives. Use the card at least once every 3 months to avoid having it closed for inactivity.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

New mortgage lending rules designed to give consumers better information and thus make better loan choices may not be as beneficial as some believe.

Under the new rule, a lender may not charge a borrower any fees beyond the credit report fee until that borrower has been given a Truth in Lending Statement. This statement, commonly known as the TIL, discloses the annual percentage rate, finance charges, amount financed, total payments, along with a payment schedule and loan terms.

By preventing lenders from collecting other fees prior to the Truth in Lending Statement, regulators sought to give buyers more choices and more opportunity to compare lenders and loan programs. They will no longer be locked to a lender by application or appraisal fees already paid.

And lenders will be bound by the TIL. Borrowers will no longer be told their origination fee is 1%, only to learn at closing that they must pay 3%.

Because lenders won’t order the appraisal until the 3 day waiting period has expired and the borrower has paid the appraisal fee, the first delay occurs at the beginning of the loan process. The loan cannot close for 7 days after receipt of the initial TIL, but that part of the rule really has no effect at the beginning of the loan process. Loans are not likely to close within 7 days from application.

The problem comes as the loan progresses, when any change of 0.125% (1/8 %) in the APR will require a new TIL – after which the loan may not close for 3 days. Often a change in interest rate, loan program or loan-related fees will trigger this change at the last minute.

That can spell additional expense for consumers who are up against a deadline for a loan lock, or who are purchasing a short sale with a per diem penalty for delayed closing.

Lenders must now give this TIL to borrowers seeking a refinance as well as those purchasing a home. Thus, a homeowner hoping to expedite a refinance loan in order to avoid foreclosure could find himself beyond the deadline.

Homeowners trying to close a “streamlined” refinance guaranteed by FHA could also face a big expense when their loan cannot close within the last 3 days of the month. If they miss this window, they’ll have to wait another month or pay an extra month’s interest, along with probably missing a rate lock.

Author:Marte Cliff
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.