Junior Reid Mortimer has owned a credit card since his freshman year at the UW. Now, midway through his junior year, he hopes to use the points he’s accumulated to travel abroad after graduation. Mortimer considers himself financially responsible, never making purchases beyond his means. While the Credit Card Accountability, Responsibility and Disclosure Act of 2009 that went into effect yesterday will regulate young people’s ability to get credit cards, he feels that it will add transparency to the system.

Signed in May 2009 by President Obama, the regulations of this act were discussed at a WashPIRG press conference held on campus yesterday. Proponents of the act hope that the restrictions will curb misuse of credit cards, protect consumers and add transparency to the charges card companies levy on delinquent customers.

“It’s a historic reform that will save consumers millions of dollars in unfair credit-card fees and interest because of ‘gotcha’ tricks and traps that the industry began imposing over the last ten years,” said Ed Mierzwinski, consumer program director for U.S. PIRG in a conference call with student leaders Thursday. “People got stuck on a debt treadmill.”

The average university student graduates with $4,100 in credit-card debt, according to a study released Feb. 15 by the nation’s largest student-loan provider Sallie Mae. Certain clauses of the act will directly affect college students and young adults.

One new regulation requires prospective card holders to submit to credit verifications. These “background checks” require anyone between the ages of 18 and 21 to find a cosigner or present evidence of a steady income or another source of payment.

“I think specifically for people our age and our demographic, we face predatory lending as exemplified by the steady stream of credit-card applications,” ASUW President Tim Mensing said. “It’s pretty relevant for people our age who are just learning to manage our finances.”

Mensing served as the student representative for a conference call last week to discuss the national U.S. PIRG campaign, The Truth About Credit. He said that, with tuition on the rise, more students rely on credit cards to fund their education, resulting in large sums of debt at graduation.

Mensing spoke of the financial illiteracy among young adults during the call; he said that many students don’t understand how short-term loans function and the consequences of postponing payment.

“This is particularly dangerous,” said Lauren Kim, campus organizer for the UW branch of WashPIRG. “There aren’t financial or fiscal responsibility courses in high school, and … [money] is still a very taboo topic within American culture.”

Kim said that the regulations are necessary among today’s students who are graduating with higher rates of debt into a floundering economy with fewer jobs.

“Students, when they enter college, have all these financial products advertised to them with these supposedly good deals,” Kim said. “But they don’t have any experience or know what good versus bad deals look like for financial products like credit cards.”

The bill pays special attention to young adults, who are targeted by lenders for their lack of financial literacy. In addition to creating mandatory credit verifications, it would require the disclosure of contracts between universities and credit-card companies. Many colleges exclusively use one ATM on campus or have affinity credit cards displaying the school’s mascot. Other regulations would prevent companies from luring students with freebies and giveaways in exchange for card applications.

General consumers will also be safe from hair-trigger raises to interest rates after late payments. Companies will now have to tell individuals 45 days in advance of a rate change, allowing consumers to cancel the card if they don’t agree with the additional fees.

“Students and non-students alike often miss the fact that plastic equals money, and credit can be really dangerous,” Mortimer said.

But opponents of the bill claim that credit cards serve as a lifeline for students who are otherwise unable to afford textbooks, tuition and basic necessities. The regulations, they say, only create more obstacles.

“That being said … people who get into credit-card debt and have money problems [do so] because their [parents] controlled their monetary life [and] are in dire need of financial education,” Mortimer said. “Having a cosigner [for 18- to 21-year-olds] won’t remedy either of these issues once they turn 22.”

Mensing agreed that the new regulations are not perfect and that high rates of debt are a national problem that cannot be solved by a single new law. He said that the new regulations won’t overcome the widespread financial illiteracy of students and the broader public.

“There have been discussions about having a finance 101 course; maybe [that’s] part of the solution, a required or mandated class,” Mensing said. “If there was a course available, I think a lot of students would take it.”

Until then, the U.S. PIRG continues to eagerly push for further development of the bill.

“There’s always going to be new ways that banks and credit-card companies can rip off consumers on fees,” Kim said. “There’s still a long way to go, but this is definitely a huge step, especially in terms of protecting the most vulnerable young consumers who are getting their first taste of credit cards.”

Reach reporter Celina Kareiva at news@dailyuw.com.