Credit Card Regulations Bill Passed By Congress

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The bill to regulate certain credit card policies has now passed through the Congress. Why is Congress regulating credit card companies? Because, they recongize the abusive consumer practices that credit cards perform each and every day, yet we still continue to use them. Here is an excerpt from the article from Fox News:

Meanwhile, the credit card portion is aimed at addressing consumer concerns.

The new restrictions would protect debt-ridden consumers from many of the surprise charges common in the industry, like over-the-limit fees and a charge to pay the bill by phone.

Some of the changes, including a requirement that cardholders receive 45-days’ notice before their rates are raised, are already on track to take effect in July 2010 under new regulations by the Federal Reserve.

But the legislation would put these changes into law and go further in restricting when and how banks charge people and who could get a card.

For example, the bill would require people under 21 to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.

As banks scramble to make up for the lost revenue, cardholders who pay off their balance in full each month could also see annual fees become the norm and lucrative rewards programs canceled.

On the plus side for consumers, card holders who see their interest rate skyrocket because they have been late on a payment would get a chance at their older, lower rate if they pay their bill on time each month for six months.

Source: Fox News

I am about to sound like a complete pessimist, but that’s because I hate banks. These new regulations sound nice for the consumer, but banks will find a way to replace the revenue they will lose from the reduced interest rates. Going forward, it will be extremely tough to find a credit card without an annual fee and with perks such as reward points and cash back bonsuses. Basically, the government is going to make a bad financial product into a horrible financial product, because now you won’t even be able to get a gift card to chili’s or an extra $100 a year from paying all of your bills a credit card and pay it off immediately.

What are your thoughts on these new regulations? Will it improve credit cards or make them worse?

  • Benjamin

    Credit card companies recently raised interest rate very much, long before we are niticed – and they said they didn’t have to nitify us.

  • Mkcoy

    I was just going to say what you said “banks will find a way to replace the revenue they will lose from the reduced interest rates”.

    While we may very well see annual fees and less rewards cards. These things are all hype. Credit card issuers are not going to want to loose there customers or potential customers so will brain storm and come up with some other attractive rewards type card that has pros and cons. They will find a loophole in the new bill passed be senate. That is what they do. They will not loose money because of this. They will find alternative ways to make up for it. You mark my words.

  • Ester Ramirez

    I agree the bank were taking advantage of consumers by their rediculous fees. However, I feel that it is going to hurt consumers now that the Credit Card companies will charge a yearly fee. Why pay a yearly fee to companies that already getting the interests which I may add are higher then God expects us to pay our tithe. Why would I be pay more to the credit companies and pay less to the Lord that has given us everything.

  • ashish sharma

    Yes this will surely improve the Credit card system and innocent customers wil now have fair deal with them

  • Melanie

    I’ve received several credit card offers in the mail recently, and I’m seeing them recover the lost revenue in the following ways:

    *annual fees
    *more stringent late fee tiers
    *balance transfer transaction fees of 5%, no cap.

    I think the increase in balance transfer and cash advance fees is going to be the biggie- it’ll really catch people who don’t read fine print and are used to bouncing balances.

    I’m interested in seeing how payment allocation works out- many new cards will pay off the higher APR balances first, which is pretty sweet, but it may encourage extra purchases while it kills your grace period.

  • Hardhead

    I went to charge my hospital bill to American Express and was informed my card wasn’t accepted. Earlier in the week I contacted AMEX asking about my next payment due to the fact I was in the hospital. Also a few weeks earlier I was bitching about AMEX increasing my rates for NO REASON!!! I had about a $10,000 credit remaining on my AMEX and today I receive an email that they cut my credit line by about $6,000.

    Luckily, I called a REP an explained my problem and he told me my account was under review… WTF all because I mentioned I was in the hospital for awhile. He granted me a $5,000 extension so I could pay my bill… yeah thanks AMEX you look like a nice guy NOT!!!