I absolutely bugs me when the Government steps in to save the consumer from himself. I've been responsible and never once had to pay interest or less then the full balance on my credit cards.
However thanks to this act I'm the one punished. On one card my low fixed rate has been transferred to a higher variable rate tied to the Prime Interest Rate, which I expect to rise after this economic downturn passes. What happens if I do have an emergency and need to rely on the good credit I've built up? On a secondary card from Chase the cash rewards benefits are being taken away. Notably the $250 check for saving $200 in cash rewards.
The Government needs to stop punishing the Responsible.
Jay
of UT
@
Nov 02, 2009 21:40:40 PM
Get some real experts!
This is US News! Get some real experts and not self proclaimed experts that have never worked for a credit card company. Just because you write a blog does not mean that you have much of an expertise...
Jim
of VA
@
Aug 18, 2009 22:58:47 PM
help2
thank you! I really liked this post!
machoman
of AL
@
Aug 09, 2009 03:05:39 AM
If it sounds too good to be true ...
Credit cards aren't free money. Shouldn't we want people to pay off their balances? An increase from 3-5% hardly sounds unreasonable.
It's widely agreed that the banks should have had more prudent lending practices for mortgages. Looks like they've learned some important lessons if they're tightening the standards for credit card loans.
msRUSK
of NY
@
Jul 29, 2009 16:57:53 PM
CARD Act
Correction to this article: The act is more commonly referred to as the CARD Act, and also effects gift cards and the like.
Adam has pretty much nailed the repercussions of this act, but I thought I'd add the most important one to his list:
5. The 29 day "grace period" on most cards will go away.
At present, the grace period allows those who are current on their cards to essentially borrow money for 29 days, interest free. As the credit card companies seek out ways to recoup the loses they will endure under the CARD Act, look for them to eliminate this grace period. That is, your purchases will begin accruing interest from the date of sale, if not the minute of sale.
Finally, the article above mentions that variable interest rates can still change if they are tracked to an "index". The problem with this bill is that "the index" is left undefined. This means that the card can track it's interest to Prime, the Consumer Satisfaction index, or even something as ridiculous as the Nielsen Index of NBC's ratings. Look for the Federal Reserve to define index tracking very quickly, but also pay attention to the index your variable APR cards track... Larger institutions probably won't be part of these shenanigans, but I'd bet more than one of the smaller companies will try to get away with tracking to something as ludicrous as the Southern California Fishing Index before they are hand-slapped.
If anyone has any other questions about the CARD Act, or what you can do to get yourself out of debt, feel free to contact me at Facebook (www.facebook.com/drdebt) or on the web.
Dr. Debt
www.debtbusters.com
David Fishman
of NV
@
Jul 28, 2009 17:02:07 PM
Future Effects
There are undoubtedly more unintended consequences to come. A few predictions:
1. Higher Late Fees - Currently topping out at $39, expect to see $40+ even up to $50 in the next couple of years.
2. International Transaction Fees - Current standard of 3% likely to go up to 4% in the short term, 5% over the next few years. This is an easy charge for card issuers because credit cards are very convenient outside the U.S. versus doing money exchanges.
3. Annual fees will become more common, or the "inactivity fee" for not using a card once per year (or less) will be used in heir place.
4. Card rewards will lessen and/or be more difficult to redeem. May even see card companies charge if cardholders want to redeem less than X number of points.
We will also see some new fees not yet concocted I'm sure.
Adam Jusko
IndexCreditCards.com
Adam
of OH
@
Jul 28, 2009 14:15:05 PM
First of all
Citizens are ALWAYS snookered when they enact laws to rein in corporations but agree to effective dates far in the future.
Effective date should have been immediate with a grace period for enforcement action.
Secondly,
We pretty well know that lobbyists wrote the act. Lobbyists write all acts. Yes, even for Dems.
Kimberly Palmer, senior editor for U.S. News & World Report, writes about how to save money, avoid scams, manage debt, and be a savvy shopper. Send your personal finance questions to her for expert money advice.
Jay of UT @ Nov 02, 2009 21:40:40 PM
Jim of VA @ Aug 18, 2009 22:58:47 PM
machoman of AL @ Aug 09, 2009 03:05:39 AM
msRUSK of NY @ Jul 29, 2009 16:57:53 PM
David Fishman of NV @ Jul 28, 2009 17:02:07 PM
Adam of OH @ Jul 28, 2009 14:15:05 PM
Muser of NM @ Jul 28, 2009 13:19:22 PM
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