As our economy continues to recover from the latest downturn, now is a good time for us to re-evaluate our personal finances and to know about the new tools that are in place to safeguard our financial security.
Last month, the Department of Consumer Affairs announced significant changes in our state's consumer protection laws with the implementation of the Credit Cardholders' Bill of Rights Act. This new federal law allows credit cardholders more control over the interest rates charged, provides a greater amount of time to make payments and makes the terms more understandable.
Credit card issuers now must give cardholders a 45-day notice before a change in interest rates or any other significant changes in the terms. Consumers can opt out of those changes, pay off the card under the old terms and not face penalty fees for closing an account. If they opt out of the new terms, they can no longer make purchases with that card. Additionally, credit card companies must mail bills 21 days prior to a payment due date, up from 14 days. This seven-day increase will give consumers a safety net to ensure their payments are made on time.
And in February, one of the most important changes will take effect: Those younger than 21 cannot obtain a credit card unless they are able to repay the debt on their own or they have a co-signer who is 21 or older, able to repay the debt and held jointly liable for the debt.
According to a 2006 report from the S.C. Commission on Higher Education, college seniors are graduating with an average credit card debt of $2,169. This is in addition to student loan debt.
I have sponsored legislation that has passed the state Senate and is being considered by the House to require state colleges and universities to put in place a formal policy on credit card solicitation on campus. Some schools already have adopted these policies, requiring credit card companies to register with the school, limiting solicitations to designated areas of the campus and developing a credit card debt education presentation as a part of new student orientation programs.
Financial literacy cannot begin on college campuses. It needs to begin at home and in school. In 2006, South Carolina began the Financial Literacy Initiative. The goal of the initiative is to teach students such basic financial skills as opening and maintaining a checking account, understanding credit and credit scores and completing a loan application as well as basic principles of insurance policies, taxes, saving and investing. Thanks to the initiative of state Rep. Jerry Govan of Orangeburg, more than 130 high schools across the state are now offering business and personal finance courses to students.
Parents need to be involved, as well. Financial literacy is one of the most important life skills parents can instill in their children. Take them to the bank, and open a checking account for them. Help them balance their check book. Talk to them, and answer their questions.
Giving children, young adults and adults the right tools and safeguards will go a long way to ensuring personal financial stability. Instilling personal financial responsibility at a young age will allow folks greater access to the American dream of personal prosperity. And arming consumers with information will empower them to make wise financial decisions.