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[06:56:46 AM Monday, January 14, 2008]
Credit Card Applications with Stars - Learn What Your Credit Card RatesIn 2008 we still are affected by the ruinous effect on our credit affairs caused by the credit card industry deregulation which took place in the 1980s. In an effort to bring greater competition onto the credit card market and, consequently, lower the costs of credit to customers, the deregulation gave lenders the freedom to set specific rates for different social groups of the American society. However, it led to a converse effect. Different pricing of credit was not the worst thing. The deregulation also entailed complex, non-transparent credit cards pricing which accounts for the ever increasing consumer debt in America as most people just cannot make out what this or that fee means and when it is imposed. The more confusing the fine print is, the more insecure your credit card rates. Today the safety of your card is very likely to be measured by a 5-star rating based on the transparency of the fine print. Introduced in 2007 by Senators of Illinois and Oregon, the 5-Star Safety Rating System helps credit card applicants and holders make a conscious choice in favor of that card or the other. How? The legislation that requires the insertion of the credit card safety through a 5-star rating system is aimed at making terms of a credit card application , bill statements, rates and fees more transparent and consumer-friendly and thus, safe for a customer. Five stars will be given to a credit card with most consumer friendly terms which are not designed to get a holder into a trouble due to their ambiguity. For the time being, when the Credit Card Safety Star rating system is still new and even maybe unwanted among card issuers, most cards on the market rate one or two stars only. But, just like it went with cars five-star crash rating system, things are going to change soon. In the effort to win more buyers, car manufactures who initially had to be content with one or two stars only, hurled into increasing the safety of new vehicles and making their services more consumer friendly. In the end, there was a rare auto that did not qualify for 5 stars for all its crash ratings. Car owners and buyers got a much better service and a similar effect is expected in the credit card industry. So, what requirements are banks and credit companies going to face and how are they expected to change their ambiguous and often predatory policies? We've outlined some of them: - Card issuers will have to give customers 90 days notice before changing terms and conditions of the agreement, otherwise they'll get only one star safety rating;
- Issuers will have to write the fine print in an easy, comprehensible form or they'll receive one star only;
- Creditors should abandon the practice to impose fees to pay a credit card bill by any method if they want to get more than just one star;
- No multiple-cycle billing should be applied and no late payment fee should be imposed within 2 days of the payment due date.
There are many more points in the new legislation which a lender has to consider to get 5 stars in credit card safety rating. The indication of the Safety Star rating should be found on all applications, credit card agreements and statements, as well as on the back of each plastic. It is expected to help customers easily compare the safety levels of a card chosen and make the right choice. The credit industry will only benefit from the new legislation, as a greater competition and predatory policy elimination are believed to come as a result. |
