Many have been excited and happy when President Barrack Obama has finally signed the newly designed set of laws and rules involving credit card lending standards. In this Senate passed bill, a lot of laws have suppressed the abuse that credit card lending companies impose upon American consumers. It is quite a relief, especially to Americans who have been drowning in their sea of debt due to bills and fees way beyond their financial capacities. However, the rule is not set to be implemented in nine months time. This nine months gap has been found to be a very disturbing and abusing period of time for consumers that credit card companies as well as lending companies have the opportunity to increase their profits before the new law is set to shake and crumble their profits.
Just last year, the Dallas' credit counseling offices and departments have received a 40 percent call increase asking for help about their credit card debts. According to the Consumer Credit Counseling Services of Greater Dallas embodied by Todd Mark they have been receiving calls mostly from people who have been buried with large amounts of debts and what was intriguing about these calls is that most of these buried people achieved their debt amounts due to interest and fees and not from the principal debt amount.
For the past few weeks, credit card companies and other lending companies have increased their credit card rates, fees and other financial sectors that they could increase as a final wave before the new credit laws would wash them down. Based on Adam Levin, a Credit.com informant, lenders would use the nine months fully to pull their profits higher so that they could survive the incoming push of the new rules.
Credit card companies and other lenders have been taking most of their profits from the fees and their interests. So, for the mean time, so that they will not go bankrupt, the companies would most likely run after the consumers who pay their bills on time which is about 45 percent of all the borrowers. The companies could also gain profit by renewing annual fees, putting in interest immediately after a purchase or service paid with the credit card and by removing any reward program that the company offers the consumers.
Lenders have also reformed new rules in borrowing. These new rules have tightened a borrower's freedom when loaning for money. This implies that there would be a lesser amount of money that consumers could borrow from the companies. Experts have also asked American consumers to make out a payment plan, follow it and control their credit card use to lessen the effects of these new rules that both the country and the credit card companies' would soon implement.
The stricter borrowing standards have in fact led the country to a lower revolving debt compared to six months earlier. Six months earlier, the country had a revolving debt of about $980 billion, now the country has a revolving debt of about $945 billion.