Credit Card Regulation Passed By Congress
Although the laws for the regulation of credit card companies have been passed by Congress, don't expect them to keep you completely safe; they'll just make the companies work harder get your money. In fact, they've already started.
Since most of the regulations will be implemented in February of 2010, credit card companies have started to raise interest rates and slash credit lines to prepare for their challenging future. The preemptive strike is expected to be executed in some way or another by most of the companies in the industry.
But why are Credit Card Companies so quick to action? It's probably the hardnosed attitude Congress has taken towards the way the businesses operate. The new regulations will try to stymie the excessive interest rates and ever-changing payment policies that have put so many Americans in over their heads. Linked with the stimulus package signed by President Obama, these new laws will play a part in the economic recovery and prevention of another recession.
A full summary of the laws can be found here.
Credit Card companies can no longer look to the youth the way the tobacco industry did; if you are under 21, you must either have the signature of a cosigner older than yourself or provide information on how you will make payments on your credit card. If done, the company cannot raise the credit limit on accounts without permission of the signer. Though this may seem oppressive, it's for young peoples' own good. The law also forbids card issuers from providing tangible gifts to college students for filling out credit card applications. This is only a sample of how Congress plans to protect the consumer from the credit card company and from themselves.
Another highlight of the laws is the sense that they really are meant to help out the everyday American with a credit card. Card issuers now have to provide sensible due dates and a convenient and consistent time of day for payments to be made. There will be limits placed on fees and penalty interests, so that consumers don't pay an enormous sum for a small mistake.
Though these laws may seem stringent and straightforward, some contain so many conditions they have to meet that one would almost always have to check to see if they apply. For instance, credit card issuers will no longer be able to raise interest rates in the first year a card was purchase, unless the increase is under a variable interest rate or, at the end of the agreed upon time period for a promotional rate.
Consumers should still approach the ownership of a credit card with caution. After all, Credit Card companies won't take these laws lying down. There will be loopholes to exploit; we are dealing with a money-making business. They will have to find other ways to make just as much money working within the new guidelines. Congress did their job, now it's ours to stay informed and not let ourselves be taken advantage of.
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