Since so many of our members are in the banking industry, perhaps some of you can explain what our latest law on credit cards is all about? I've heard all kinds of heresy, not all of which I quite believe.
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Since so many of our members are in the banking industry, perhaps some of you can explain what our latest law on credit cards is all about? I've heard all kinds of heresy, not all of which I quite believe.
"Credit cards will be more transparent and easier to understand for everyday Americans. Credit cards will become more costly for all users, say issuers and industry analysts, and inaccessible for low-income families. Look for the return of routine annual fees, fewer rewards cards and the possibility that bills will be payable immediately rather than after a monthlong grace period.
Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and fewer penalty fees, late charges and interest payments. The law also fundamentally changes the way credit card issuers market, bill and advertise credit cards. "
It's really hard to say, but I suspect prior to the law taking effect - you are going to see credit card issuers start jacking up rates, increasing annual fees, adding usage fees to people who pay their balances every month, and a tightening of issuing standards.
This legislation really does bring in some good ideas - although it effects us in no way since we don't have any annual fees or late fees, and our card - although not technically fixed in the user agreement - has been 12.99% since I started with the Credit Union in 1996, even for cash advances. I believe that's been the rate since the Credit Union began offering the card around 1993 or 1994.
But I expect to see my rates on my other cards start to go up and I'll have to either eat it, or not accept the increased rates which then means the account is closed - which will hurt your credit score as your utilization rate will go up. Depending on your other balances and debts, this could be a huge blow to your credit score. It's going to effect people in different ways depending on their own situation.
Lets face it - like any other costly government regulation, do you think banks are going to just sit there and take less money? No.. the consumer ultimately pays the price one way or another. The government just likes the huggy/feely benefit of saying it is "protecting consumers" and political posturing. Again, I think this bill has some very good consumer protections - but the implementation is greatly flawed, typical of any government intervention in the free markets.
Nobody forces people to get credit cards and sign their names on those purchases. However, I fully think it's bullshit when a card issuer cracks up your rate when you've never missed a payment because they create an arbitrary risk profile on you. I believe that as long as you are making payments according to your obligation with the Credit Card company, they should be unable to raise your rate UNLESS your rate is tied to the Prime Rate, etc. and adjusts like any other variable rate loan.