Schumer backs limits on youth credit cards

WASHINGTON — Sen. Charles E. Schumer said Wednesday he will support legislation requiring people younger than 21 to have a parent or other adult co-sign applications for credit cards.

The measure would cut down on college-aged youths' debt and encourage responsible credit card use, Mr. Schumer said in a conference call with New York reporters.

"Credit cards should be a leg-up for college students, not a leg-trap that snares them in unbearable debt," Mr. Schumer said.

The bill would also require applicants younger than 21 to take a financial literacy course approved by the U.S. Treasury Department before obtaining a card.

One consequence of the legislation is that applicants of that age would either benefit from or be disadvantaged by their parents' credit histories, because the parent would become part of the application and be responsible for any default.

A spokeswoman for an association representing credit card companies said it is not clear how the legislation would affect an applicant who has no legal guardian or parent to co-sign, although Mr. Schumer said any adult could substitute.

Generally, Mr. Schumer said, the problem with credit cards is that companies are issuing too much credit, and that much of it has been "irresponsible" and "overblown."

Frequently, he said, college-aged people have no idea what annual percentage rates are or how credit cards work. College students in Northern New York graduate with $81 million in credit card debt. The figure is $1.2 billion across upstate New York, he said.

The legislation also restricts credit card offers to people younger than 18 and allows prescreened offers to people between 18 and 21 only if the consumer gives permission.