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?
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