CREDIT CARD NEWS
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » Credit Card Industry Reform

Credit Card Industry Reform

May 24, 2009
Add to Favorites:

The legislation imposing stricter rules on the credit card industry was signed by President Barack Obama on Friday. The new law will take effect in February 2010. The laws are intended to protect consumers against “any-time for any-reason” changes. Here’s a brief look at the key pros and cons associated with the new legislation.

For years, credit consumers have been waiting for a law that would protect their rights. According to the Credit Cardholders’ Bill of Rights Act of 2009, card issuers will not be able to use certain practices, like double-cycle billing, universal default and others. And even though the new law does have good points, the analysts still argue about its pros and cons.

The main question on the consumers’ lips is, whether the interest rates will go up? Actually, that was the key argument of credit card reform critics. Once the new law restricts lenders to adjust interest rates on the existing balances, the issuers will have to make up the lost revenue somewhere. And the chances are banks and companies will impose annual fees and higher interest rates on the accounts of the majority of customers. In addition to that, companies may slim down various lucrative rewards programs. Meantime, experts believe that lenders will reserve the best credit card applications for the best customers.

The next question is, whether the credit card reform will make it difficult for people to get access to credit? Actually, it’s already tough to get access to credit, but there’s no reason to blame the reform for that. The point is that companies and banks have become more conservative about the choice of their potential customers. Because of the challenging economic situation, leading credit companies have greatly slashed the amount of credit card mail offers. All the more so, the companies are highly concerned about the financial responsibility of their current customers.

While more and more customers are losing their jobs, companies are seeing ever-increasing default rates. So, it’s no surprise why lenders increasingly slash credit limits on the accounts of their customers. Many analysts acknowledge the fact that credit limit cuts are not that bad for the economy. In the past few years, banks provided big spending lines to those borrowers who didn’t need them. And now card issuers can reduce their exposure to big risks associated with credit defaults by cutting spending limits on the accounts of their customers.

All in all, there’s plenty of time until next February, so banks and credit card companies will compensate their losses by using all those banned practices and tactics before the new law kicks in. However, it’s worth saying that although companies raise interest rates, they still allow their holders to freeze old interest rates but, in that case, customers will not be able to use their cards anymore.

If you’ve been hit by high interest rates, act promptly – get in contact with your issuer and try to negotiate the issue by phone. In case the company doesn’t meet you halfway, you can opt out of new interest rates, but you should do this in writing. And, finally, be sure to check your monthly statements for any changes.

Add to Favorites:
  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.