The winds of change are blowing through the credit card industry… again. Both the House and Senate recently passed a credit card reform bill that was quickly signed into law by President Obama on Friday, May 22.
Very similar to the changes approved by the Federal Reserve Board in December, this legislation will restrict credit card issuers from retroactively raising rates until a cardholder is at least 60 days delinquent, ban double-cycle billing and universal default, and prohibit solicitation of cards to minors. Card issuers will be required to comply by February 2010, five months sooner than the Fed had originally planned.
While these changes are intended to protect consumers, many consumers may be hurt by the changes. For example, many banks count on the revenue generated from these tactics and will need to find alternative sources of income. So consumers who pay off their credit card balance each month may now be charged an annual fee or may have their rewards programs discontinued. And, of course, these institutions may further restrict who they are willing to approve for a credit card.
Members who have an Insight Financial credit card won’t really notice changes from these reforms as the credit union has not used these tactics. But if you have a credit card from another financial institution, do a little research to make sure you are getting the best deal for your particular situation. And if you have any questions, please contact your Money Coach.
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