Despite the excitement and anticipation for the Obama administration's CARD Act of 2009, analysts are warning that the new measures can actually benefit card companies, instead of helping cardholders. While the law itself is designed to protect consumers from the common practices of card companies, the period preceding its implementation is giving issuers more time to maximize their profit at the expense of cardholders.
Some card issuers are also trying to earn their clients' trust, sending out notices that they will not be imposing penalties on cardholders who go over their credit limits. According to experts, however, banks and issuers are just trying to comply with the implementation of one of the new law's measures. Card firms will be required by law to notify cardholders 45 days in advance before any changes to their interest rates, credit lines, or terms. Consumer advocates say that this particular feature of the new legislation will give consumers more time to prepare themselves and their finances against the changes.
Card companies in recent months have also resorted to lower fees and charges to encourage cardholder to spend more. However, analysts say that the gesture is actually misleading since issuers raised interest rates substantially to make up for any loss income. With the implementation of the CARD Act's forewarning measure, banks and card firms are left with one less source of income.
Even the lawmakers who fought for the legislation to become a law are under fire for not including some provisions. Analysts say that during the CARD act's stay in Congress, legislators have failed to include a provision that would cap maximum interest rates charged by card companies.
Such a measure would essentially limit issuers' ability to slap on just about any interest rates. A recent survey conducted several months ago have discovered that majority of American families have credit cards whose interest rates range from 14 to 20 percent. Experts say that households across the nation can save thousands of dollars each year if Congress opts to put a cap on interest rates.
In their defense, lawmakers cited worries about Americans not being able to get unsecured credit cards. Debbie Stabenow (D) of Michigan, says that giving consumers the power to control interest rates would force card companies to be selective in offering credit cards to potential clients. Stabenow was one of several lawmakers who opposed the proposal set forth by Vermont Independent Bernie Sanders.
