Free Research Paper On Should The Minimum Age To Obtain A Credit Card Be Raised To 21?
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In a fast-developing and increasingly transparent world of banking regulations, the use of smart cards for cash payments has become an easier and safer method for securing the money and the time of the users by eliminating the risk of getting frustrated at the cash-deal counters. Banking industry takes the unlimited possibility of information technology to walk with the expectations of its dignified customers and make them comfortable with fixed credit facilities at their disposal through credit cards. However, the allotment of this facility to teenagers may bring adverse impact on the banks and societies as they may fail to comply with the legal responsibility and the efficacy associated with the usage of the credit cards. Since money is the most influential element in the economic transactions, the parental supervision is the primary decisive factor behind the fitness of a minor’s and unemployed teenager’s possession of credit cards. This paper will explore the facts and assumptions to support the argument that the valid age for access to credit card utility must be moved up to twenty-one years in case of unemployed individuals.
Development and Popularity of Credit Cards
The revolutionary feats of the Information Technology (IT) has seen the replacement of majority of material utilities and over-the-counter dealings with smartcards and internet based services for the access and time saving and cost effective access of the customers. Presently, smartcards are an integral part of the daily life of people of all categories, young and old alike. This popularity has gained the unchallenged position of the smartcards in every walk of the socio-economic human interactions ranging from communication, employment, travel, banking, healthcare, hospitality and the list goes longer. One of the best used service of smartcards is found in the banking and financial transactions in the form of credit cards and debit cards. The technical variability of the two banking cards differs in accordance with the norms and regulations of the services offered by the providers through them to the customers.
The ideas of credit tokens evolved as a part of consumer credit facilities in the United States soon after the World War II; however, these cards were not in the electronic format. They served the purpose of documenting the evidence of credit liabilities and eventually gained popularity across the country. According to the 1974 Consumer Credit Act (Edwards), a credit card is “a card, check, voucher, coupon, stamp, form, booklet or other document or thing” (Edwards, 476). Later on, the cards meant for arranging and dealing credit transactions entered the exclusive electronic transaction systems and continued to render services to the customers in various ways.
Credit cards carry the details of the users and when connected to the card reader, the microprocessor starts working out the information and responds to the instructions by the user. In this way, they reduce the time consumed for the manual labor associated with the assigned task and besides saving the cost of operation, the service provider banks can secure transparency and build and technical bond with the customers. The credit card services are more transparent and accountable between the provider and the end user than over-the-counter services because of the better accuracy provided by the electronic recording systems. Moreover, the customers can enjoy the benefit of automatic update of credit balance on a recurring basis every month after the clearance of the outstanding debts owing to the previous month’s transactions.
Legal implications of Credit Card utility
The legitimacy of credit card utilization has, like any other financial transaction, been a concept for the literature of the laws of the countries where there are users and service providers. In a country like America, the role of credit cards is very important in the daily life of people and for the management of organizations and department offices. As the majority of the population relies on credit cards for their purchases and cash payments, there is the real need for a standardized regulatory platform for credit card services. According to White House notification “Fact Sheet: Reforms to protect American credit card holders” on the credit card laws, President Obama directed for the amendment of the laws and the eventual development under the Credit Card Act of 2009 has seen the ban on unfair rate increases, blocking the hidden fees, clarity of definitions of accountability etc for making the services transparent and customer-friendly. The complex nature of the transactions and recovery proceedings makes it essential for the credit card holders to access the full knowledge about the legal responsibilities as users. The constitutional literature provides for the protection of the customers under section 127 of the Truth in Lending Act which relates to the requirement of a prior notice of rate increases and major changes, as well as the provisions for right to construction and rule of cancellation etc (One Hundred Eleventh Congress of the United States of America, 267-2,3). The furtherance of the law under section 149 deals with reasonability of the circumstances leading to penalties while section.103 makes the definition for fixed rates. Section.163 describes the provisions for repayment and subsequent aspects like grace period and consideration of ability to repayment etc. One of the most typical features of the legal text for the credit card services is under section.513, which endorses English language skills as an essential customer fitness criterion (One Hundred Eleventh Congress..).
The Debate of Legal Age
The complex nature of the credit card laws and related legal accountability of the users draw the attention of the debaters to recheck the minimum permissible age for holding credit cards. Although different countries have varying views about the legitimate age of credit card ownership, a general assumption must support the argument that the minimum age for approval of credit card rights must be risen to twenty-one. Unlike the right to vote or driving license or any other rights necessary for free life as an adult individual, the right to take credit must be proportionate to the ability to repay it. As such, a credit card in the hands of a non-earning adolescent can mean the failure of repayment and thus an increasing burden both on the service providers and the families of the individual defaulters in those instances.
The government authorities continuously monitors the credit-debit ratios and advise the governments to make timely amendments on laws and provisions with regards to the credit card utility services in the United States owing to the intensity of the ratio of defaults. The increasing number of repayment defaults affect in the proportion of a higher penalty demand, which can indirectly affect the public life and increase the criminality concerns among the youth. As Prater reports in creditcards.com, the baking and credit card provisions amendment of the 2009 reform by the US government has made a mixed impact on the customers as many of them believe the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act 2009) will make a negative impact on the existing card holder as a result of the credit at a time policy. Further, the new law puts the people on a difficult legal track which makes the exit a complex process as the entry. And as such, the law makes the people responsible to live within their means develop the habit of repaying the debts without fail. This typical literature will cover the users irrespective of their age, and the increasing instances of legal pressure will reflect in the criminal involvement of the economically deprived youth in taking up extreme activities to repay their debts in order to get rid of the tussles of Credit CARD Act provision. Under this assumption, the stronger claim goes in support of the issue of cards to only those who are entitled to hold them. In other words, it is not age, but the competency to repay must be the criterion for issuing a credit card.
Despite the numerous debates on the validity of age limits and provisions for owning a credit card in the US context, the decision of rising the age to 21 draws various opinions from the public. Many of them are of the view that awareness of the legal implications and provisions of the credit card services are more important than the fixation of a particular age as the fitness for possession of the card. In many cases, the user’s integrity to responsibility stands irrespective of his biological age. The response to the quest for accountability and responsibility in financial transactions varies according to the behavior of the individual card holder. According to Mansfield et al, some negative impacts of credit card facility allotted to younger generation directly reflect in the socioeconomic disparities among the peers in colleges, universities or other centers of cultural unity. Moreover, the complications associated with the credit card issuance and the subsequent disclosure formalities show a decreasing tendency among the card users, who turn to debit cards for their payments. Borzekowski et al indicate that the frequency of debit card usage is increasing with education and women users outnumber their counterparts for security concerns (19). This shift effectively means that credit card culture is subsiding with the years since the enforcement of the Credit CARD Act and as result, the age for using credit card will be fair if it stands at twenty-one according to the present economic conditions in the country.
The constitutional literature of the United States of America has provided for the rights and responsibilities of individuals with regards to financial transactions in the country. The development of technology has made a revolutionary change in the cash-management sector by introducing credit cards. As a result, the American population rapidly shifted to the credit purchase culture which eventually caused concerns for the economic authorities with the complications associated with the increasing debt recovery issues. In the meanwhile, the Credit CARD Act took effect from 2009 and redefined the user expectations. The government’s move for rising the minimum age to 21 for holding a credit card has s drawn longer and wider debates. On the basis of the assumptions and the beliefs that support the principle of earning competency over age for credit facility, the argument goes in support of the government’s choice.
Borzekowski, Ron et al. “Consumers’ Use of Debit Cards: Patterns, Preferences and Price Response”. Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. April 2006. Web 19 March 2015. http://www.federalreserve.gov/pubs/feds/2006/200616/200616pap.pdf
Edwards, Burt. Credit Management Handbook. Gower Publishing, Ltd., 2004. Print.
Mansfield, Phylis M. “Consumers and credit cards: A review of the empirical literature”. Journal of Management and Marketing Research. 1-26.
One Hundred Eleventh Congress of the United States of America. Web. 19 March 2015. http://www.gpo.gov/fdsys/pkg/BILLS-111hr627enr/pdf/BILLS-111hr627enr.pdf
Prater, Connie. “Obama signs credit card reforms into law Enactment starts the clock ticking on new consumer protections”. Creditcards.com. http://www.creditcards.com/credit-card-news/obama-signs-credit-card-law-1282.php
The White House. Office of the Press Secretary. FACT SHEET: REFORMS TO PROTECT AMERICAN CREDIT CARD HOLDERS. https://www.whitehouse.gov/the_press_office/Fact-Sheet-Reforms-to-Protect-American-Credit-Card-Holders/
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