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My first unsecured credit card came with a $20,000 limit—here's why that is rare today

CNBC Select explains the CARD Act, how it has changed credit card applications for college students and ways that young people can start building credit

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When I was a college freshman, I received a preapproved credit card offer from Capital One that came with a surprising $20,000 limit.

It wasn't a surprise that a credit card offer was mailed to my dorm — I'd been using a secured credit card to build credit since I was 18, and I had a good credit score for my age.

The surprise was how much credit Capital One was willing to lend me.

When the customized, tie-dyed Capital One Platinum card arrived, I felt the weighty responsibility of $20,000 in my hands. Though I'd worked part-time jobs all throughout high school and had some savings, the income I made at my college job selling barbecue was not even close to enough to support that kind of buying power.

Today, this probably wouldn't happen. In 2009 — a year after I opened my Capital One card — Congress passed the Credit Card Accountability Responsibility and Disclosure Act, or the Credit CARD Act, implementing sweeping protections to help consumers avoid getting in over their heads with credit card debt.

Among other reforms, it imposed stricter rules for card issuers around marketing and lending to consumers under 21. Credit card limits are now much more regulated, especially for young borrowers.

Below, CNBC Select shares a bit of background on the Credit CARD Act, how it's changed credit card applications for college students and ways that young people can start building credit.

What is the Credit CARD Act of 2009?

President Barack Obama signed the Credit CARD Act on May 22, 2009, and in 2010 it became law.

Experian calls the Credit CARD Act the "most significant legislation regulating and reforming the credit card industry in decades." It demanded more transparency in billing, fairer methods of calculating interest and better communication from card issuers to their consumers.

The Credit CARD Act included the following reforms:

  • It ended the practice of double-charging cardmembers for interest they'd already paid off before. (Before, issuers could calculate your interest based on the average daily amount of your previous two billing cycles.)
  • Card issuers are now prohibited from surging interest rates except for a few defined circumstances, like when 0% financing runs out, a temporary hardship period ends or you're charged penalty APR due to missing a payment. And when issuers do charge you higher interest, they must now send written notice.
  • Credit card companies must now help familiarize cardholders with their accounts so they can manage them better. (As a result, card statements now clearly state how much you would pay in fees and interests if you only made the minimum payment.)
  • You can't get hit with a higher interest rate on one card if you pay a bill to another creditor late.
  • There are now limits on what fees your card issuer can charge you. (Keep in mind that late fees may still rise due to inflation, despite the Credit CARD Act's previous caps.)
  • Credit card companies now must stay at least 1,000 feet away from college and university campuses if they are going to offer sign-up gifts to students in exchange for completing a card application.
  • Young people under the age of 21 must either have an adult cosigner or show proof (usually a source of income) that they can repay their credit card balance.

While the Credit CARD Act was sweeping, it did not impose an overall cap on interest rates, which is one reason why credit card APRs are still so high. It also limited its protections to personal credit cards, not small business credit cards. 

How the CARD Act changed credit cards for young people

Because of Section III of the CARD Act, borrowers under the age of 21 now must either have a parent cosigner or show proof of sufficient income to qualify for their first credit card.

Young people are also far less likely now to receive prescreened offers like the one I got when I was 19. Credit bureaus, such as Experian, Equifax and TransUnion, are not allowed to share credit reports of consumers under age 21 with companies who may target them for new credit products.

The CARD Act also solidified the definition of "college student," making it a distinct category of consumer worthy of unique protections. From Sec. 305 C: The term 'college student' means an individual who is a full-time or a part-time student attending an institution of higher education.

Before the CARD Act, universities commonly partnered with card companies to offer what was known as a "college affinity card" that often had the college mascot on the front. Nowadays, college student credit cards are still popular, but you won't likely get a free t-shirt for signing up for one.

Instead, you can research and apply for a college student credit card online. Below, we share some of our top picks.

The best cards for students

According to Sallie Mae, over half (57%) of students have a credit card, and most only have one. And while the average credit limit for first credit cards is significantly less than my first unsecured credit card, college students can still benefit from building credit with a new card, provided they spend within their means.

There are numerous college student cards available, each providing unique benefits for different types of students — from foodies to international students to commuters. These cards tend to be more lenient with credit history requirements, but you do have to be 18 and have a steady source of income.

One option is the Citi Rewards+℠ Student Card, ranking on CNBC Select's list of best student cards for making small purchases and shopping at the supermarket. And if you have no credit history or you are an international student, consider the Deserve® EDU Mastercard for Students, which also makes our best-of list.

Learn more: Read our full breakdown of the best credit cards for college students.

Other ways to build credit

You usually have to be enrolled in college to qualify for a student credit card, but there is one exception: The Journey® Student Rewards from Capital One® doesn't require proof of college enrollment to qualify. 

Otherwise, if you aren't a student or you are a recent grad who didn't have a credit card in college, the Petal® Visa® Credit Card is CNBC Select's number-one choice for people looking to build their credit history who don't want to use a secured card. During the application, Petal may review your bank statements and other information like bill payments and earnings. If you pay your bills on time or you have regular income, Petal will factor this into your application. And if you do have a credit history, it will count.

The Petal Card doesn't charge many of the most common credit card fees. Credit newbies can learn credit card basics without worrying about paying annual fees, late payment fees or foreign transaction fees. However, if you do make on-time payments, you can earn more in cash back after a year. This is a great way to encourage timely payments, which is the most important factor of your credit score.

Learn more: Here are the 7 credit card tips that nobody usually tells newbies

Information about the Capital One® Platinum, Citi Rewards+℠ Student Card, and Journey® Student Rewards from Capital One® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Petal Card issued by WebBank, Member FDIC.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.