Gill-Weinberg Bill To Restrict Credit Cards For Those Under 21 Advances

TRENTON – A bill sponsored by Senators Nia H. Gill and Loretta Weinberg which would require credit card companies to obtain parental consent before issuing a credit card to someone under the age of 21 was approved by the Senate Commerce Committee today by a vote of 4-0.

“Especially during the current economic crisis, a line of credit can be incredibly tempting – and extraordinarily dangerous – for young people who don’t understand the consequences of massive credit card debt,” said Senator Gill, D-Essex and Passaic, and Chairwoman of the Commerce Committee. “It’s become more and more common in our society for young people to build up thousands and thousands of dollars in unpaid credit card debt before they reach their mid-twenties. Hopefully, by informing parents of their kids’ credit decisions, we can encourage them to offer advice and guidance, so that their children can avoid costly mistakes which will limit them down the road.”

“Many young people don’t find out until it’s too late just how damaging bad credit can be,” said Senator Weinberg, D-Bergen. “They don’t see the downside of paying the minimum due on that high definition TV they bought on credit for their dorm room. But when credit card debt snowballs and they find themselves in default, that can have serious consequences when they go to purchase a car or a home in the future.”

The bill, a Senate Committee Substitute for S-1259 and S-1022, would require credit card issuers to obtain the consent of a parent or legal guardian before issuing a credit card to an individual under the age of 21, and claimed as a dependent for tax purposes by their parent or legal guardian. The bill would require that the credit card issuer provide to the parent or legal guardian both a copy of the terms and conditions of the credit card as well as a copy of any billing statement or other applicable repayment information at the same time it is provided to the individual who is issued the credit card.

“As much as many kids might be loathe to admit it, their parents are an invaluable source of wisdom and advice – and when needed, financial assistance,” said Senator Gill. “By copying parents on their children’s credit card bills, we would be able to get parents involved before credit card debt spirals out of control. Through this legislation, we can hopefully give New Jersey’s young adults the parental support they need to avoid mountains of credit card debt.”

And finally, the bill details repayment information that must be provided on every billing statement, including how long repayment would take if only the minimum monthly payment is made and the total cost to the individual should he or she decide to only pay the monthly minimum. This information is intended to serve as a deterrent to making only minimum monthly payments, which can cause debt to accumulate and interest rates to increase.

“One of the most dangerous aspects of a credit card is the ability to put off today what you can pay for tomorrow,” said Senator Weinberg. “By paying the minimum due on a credit card bill, you’re tacking on needless interest payments which can double or triple the cost of your initial purchase over the lifetime of the credit card debt. This bill would require credit card companies to spell out the hidden costs of interest in plain language, so that credit card holders would be encouraged to pay off as much as they can.”

Any violation of this bill would be deemed an unlawful practice under the Consumer Fraud Act, and would be subject to a monetary penalty of up to $10,000 for the first offense and up to $20,000 for subsequent offenses.

The bill now heads to the full Senate for consideration.