Credit Card Reform Law signed by Obama

TonyT

DTVUSA Member
#1
Credit card users who crow that they're seldom charged interest on purchases because they pay their bills on time may not be able to crow much longer. President Obama is about to sign into law new restrictions on the credit card industry that lenders say may lead to the return of widespread annual fees.
washingtonpost.com

The new law — which includes restrictions on interest rate increases and credit offered to college students — deals a blow to the banking industry, which has lobbied aggressively against tighter regulation. At the same time, it provides less than a complete win for consumers because it doesn't cap interest rates or fees.
Obama signs into law credit card reform - USATODAY.com

I realize that there's no guarantee that annual fees will return, but I think it just plane stinks.
 

bicker

DTVUSA Member
#2
Indeed, reality is a tough thing to deal with. I was explaining the situation to our waitress at lunch yesterday: If you make offering credit cards so much less profitable, then banks will simply take their assets and apply them to offering other services, like mortgages, or business loans, or investing in money markets. Every dollar of operating budget competes with every other possible way a company can apply that dollar to the objective of making profit. So if you make one service so much less profitable, then you'll end up with fewer companies offering that service, or more companies offering that service in a manner other than how consumers want it offered.

One thing, I think, that a lot of consumers have a hard time understanding is that business is like an amoeba: If you push one side in, it is going to cause a bump-out on the other side.

I do expect annual fees to be reinstated. What I fear is credit card companies switching terms to charging interest from date of purchase, rather than providing a grace period. That would really cost me a lot of money.
 

Boo-Ray

DTVUSA Member
#3
Changes to rewards programs will probably be inevitable. No good for me because I make a lot of business purchases utilizing the grace period while racking up points as well.

Bottom line is: It needed to happen, though now may not have been the most opportune time. The intent of this law was to even the playing field for all consumers.
 

Piggie

Super Moderator
#4
You can already say there are too few companies offering credit cards that lead to them signing the law. Most of the companies most targeted by the new law are also the "too big to fail" banks, that have merged repeatedly reducing their competition.

So to follow the free market example there are already too few banks. But the "free market" people in govt and business are not true free market people. They don't want everyone in business, they want huge monopolies that control the market, which is their version of free markets.

I believe the comments by the big banks that they will have to "penalize" the good customers is fear mongering. If they implement it I hope the best for them. There are many still smaller banks that have much better deals on credit cards.

Me and my wife have Visa cards from a local credit union. There are no annual fees, there are no automatic credit line increases, their rates have never been the best of best but always within a point or so of the best. They don't have penalties for late fees. They also don't give loans and credit cards to every Tom, Dick and Harry. They put you through a real investigation before it's issued. That is their key. The loan money to people that can really pay it back.

So we already gave tens of thousands per household to save these big banks in tax dollars and now they want to raise good customer rates?

I think not, or I will drop my commercial credit cards in a second. I hope others do the same. After all they want to penalize people with small balances that pay one time. These are the people that next month can pay their balance and say good bye. These are also the people savoy enough to know where else to get a credit card.

It's fear mongering, and cooperate terrorism akin to WMD. The smoking gun of credit cards.

If you buy into their economic logic, one needs to go study economics again.

The one thing they have on their side is the last 30 years of US govt, both parties, non excluded since the days of Carter, of allowing corporations owning Washington DC from their offices on K Street.
 

Aaron62

Contributor
Staff member
#5
I have some strong feelings about this one. I had decided to go back to school full time about 3 years ago after turning 21. I had a little money saved and a credit card from chase bank and Discover. Both had pretty high limits and great interest rates. So after getting student loans, I thought I'd use the credit cards for paying for other expenses and etc. Fast forward to about 6 months ago. Between the 2 credit cards I have about $10K debt, but I've made every payment on time and am only at 50% of the total limits. Chase bank sends me a letter informing me that they were more than doubling my annual percentage rate to 29.99% because they've determined me as a credit risk. I had done NOTHING wrong. I called to complain and only got the run around. When I told them that I wanted to cancel the card, they reminded me that the card had to be paid off before I could do that. Now I'm stuck with a high interest rate until I graduate in 6 months and there's nothing I can do about it. I work summer jobs which allows me to pay a bit down, but it's completely unfair. I'm so glad this law actually went through but it's about a decade or so late.
 

Piggie

Super Moderator
#6
I have some strong feelings about this one. I had decided to go back to school full time about 3 years ago after turning 21. I had a little money saved and a credit card from chase bank and Discover. Both had pretty high limits and great interest rates. So after getting student loans, I thought I'd use the credit cards for paying for other expenses and etc. Fast forward to about 6 months ago. Between the 2 credit cards I have about $10K debt, but I've made every payment on time and am only at 50% of the total limits. Chase bank sends me a letter informing me that they were more than doubling my annual percentage rate to 29.99% because they've determined me as a credit risk. I had done NOTHING wrong. I called to complain and only got the run around. When I told them that I wanted to cancel the card, they reminded me that the card had to be paid off before I could do that. Now I'm stuck with a high interest rate until I graduate in 6 months and there's nothing I can do about it. I work summer jobs which allows me to pay a bit down, but it's completely unfair. I'm so glad this law actually went through but it's about a decade or so late.
All of this is started about a decade ago. It is crude (read that the other word). When I was a kid, they arrested people in town that did that, called being a Loan Shark. Now it's sanctioned by law, until the law kicks in.

Obama to me is wimping out (on other stuff too). There is nothing going on about these banks, that are too big to fail, make decisions that are bad to an Economics 101 student, yet propped back up without any changes. All the screaming and yelling in Congress about not doing the bail outs like Bush, I can't see any difference.
 
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