New Credit Card Rules

Credit card debt is something that most Americans live with and the current credit crisis has had an effect on the amount of credit available to consumers. As credit freezes, less capital is available to these credit card companies to lend. Unfortunately, money flow has been slow due to the mortgage crisis and many have been slow to pay their payments. Defaults on credit cards are happening daily as many struggle to stay afloat with mounting job losses and lack of overall funds. As unemployment increases, so do defaults of every kind, resulting in car repossessions and home foreclosures. A recent bill has been passed in Congress that will protect consumers from any unreasonable practices perpetrated by credit companies.

For the most part, if you are late by more than 30 days on a credit debt payment, you are in jeopardy of your interest rate going up astronomically. In this economic climate, it is highly likely that we may not be able to keep up with all of our bills. We sometimes need help and can turn to payday loans and other such vehicles for assistance. Although there are some options that are available to us, they sometimes are just not enough. The bill in question will regulate when and by how much these rates can climb due to payment delinquency. This will help stop any predatory lending practices by not allowing credit card companies to prey on the poor and unemployed. Credit card companies make most of there money on the jacked-up interest rates they charge those who are late on payments or those with poor credit and this bill will make sweeping changes in the industry and help those in need.

Not only will these high interest rates be curbed, but the amount of time consumers have to pay their bills will be increased as well as the amount of notice that must be given before a legitimate rate hike is instituted. Not only that, but, in some cases, 60 days of non-payment will be required before a rate hike can be applied. In the past, these rate hikes were almost always permanent, but the new bill will force credit card companies to lower the rate back to its previous amount after six months of prompt payments. The bill was passed by 90 out of 95 senators, with two of the opposing senators from South Dakota, where many of these companies do business.

Unfortunately, since these companies make quite a bit of money off of these high interest rates, they will have to look elsewhere to make up that portion of their profit. It is likely that we will see a small increase in fees, as that is also a major portion of their profits. Those who pay off their balances monthly will probably see higher annual fee rates as well as an overall pullback on their rewards. We may also see less overall lending as the companies will not be as motivated to lend as they were in the past. Overall, this legislation will protect the consumer from being gouged by credit card companies, while also possibly weeding out those companies who are unscrupulous in their practices.