Credit card reform law's major provisions are a year old on Feb 22nd.

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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sdfinch
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Credit card reform law's major provisions are a year old on Feb 22nd.

Postby sdfinch » Thu Feb 17, 2011 12:22 pm

Credit card reform law's major provisions are a year old on Feb 22nd.

On Feb 22, 2011 will be 1 year since the major provisions of President Obama’s, Credit Card Act of 2009 took effect. These changes are some of the biggest that have ever happened in credit card history. The change impacting consumers most was one that ended surprise interest rate hikes. Banks can no longer freely jack up interest rates on consumer credit cards. APRs can be increased on existing card balances in only a limited number of circumstances, such as when cardholders are more than 60 days late paying their bills. As you may have noticed most all banks raised your interest rates before this Act launched in Feb of last years. People that had good rate before now see them jump between 20-30% somewhere and for no reason. If you had a fixed rate credit card, you most likely got another notice saying you are now on a variable interest rate.

The study also found that despite banks' assertions that the new law would raise interest rates for all consumers; annual percentage rates APRs) have remained flat on average when you discount the impact of the economic downturn. This is only because the bank made those changes right before February. So in the last year there have not been any increases in interest rates unless you’re late on a payment or go over the limit. Now you will see your interest rate go up right away in this case. There is no more forgiveness for late payments where your rate stays the same. It will go up for sure!

The credit card reform law kicked in just as the economic downturn was strangling the country, industry and banking analysts have said it was difficult to say for certain which development had the greatest impact on credit card rates - the economy or the regulations.

Interest rate gap falls between promised rates, actual rate on their cards

The major findings were based on data released monthly by the Federal Reserve showing interest rates consumers actually pay on their credit cards. Researchers say this is a better measure than rates that are advertised by issuers or offered in direct mail solicitations. The study showed there was a gap between what consumers are offered for interest rates and what they actually paid. That gap now has narrowed after the credit card reforms took effect and stated rates were close to actual rates paid.

Industry sees trade-offs

The banking industry says although consumers have benefited from the card law reforms, there have been trade-offs that haven't been so beneficial. More annual fees have been reinstated or added to many accounts, and banks have introduced a host of new fees in an attempt to make up projected revenue shortfalls from interest consumers are no longer paying.

The credit card companies are making their offers look a lot better on new cards now. You will most likely get a 0% interest rate for 6-12 months and between 11.99%-21.99% afterwards based on your credit score and worthiness.

Looking into the future of credit cards

The future of credit card use is not looking good and it’s not because of the economy! It is actually Technology that is going to change how we use our credit cards. We are on our way to using cell phone technology to pay for our purchases. You will be able to bump your cell phone at the register to pay for your purchases. Sounds crazy for sure doesn’t it ! But if you told me 10 years ago what my 4g cell phone would do, I would say you’re crazy.


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