Pros and Cons of the Credit Card Bill. CS Monitor coverage.

[madfloridian]

Credit-card bill: What it does, what it doesn’t do

They are speaking of the bill as if it will make huge differences. There are some good points, but the lack of a credit card cap will make the other changes seem minor.

Bank of America recently sent us a letter that if we use our card this month the rates will go way way up high. Like from 8% to 18% or perhaps 21%. They are not very clear on the details. And even if they laid it all out in detail....our interest rates would still be going way way up.

We mostly pay them off each month. But see, that doesn't matter. If we use the card the rates will go up. No matter how good a customer we have been.

Here are the Pros. There are a lot of them. They do not outweigh the lack of a cap on interest rates.

Among the things it does:

-Hidden fees. It bans arbitrary interest-rate increases and hidden fees, such as charges for paying off a credit-card bill over the telephone.

-Full disclosure. It requires clear disclosure of the terms of credit-card agreements and any changes made to them.

-Universal default. It bans the practice of “universal default,” which allows companies to dramatically raise interest rates on a credit card if the consumer is more than 30 days late on any other payment.

-Freeze on rate increases. It prohibits companies from increasing rates on a cardholder in the first year and requires promotional rates to last at least six months. Rate increases must be periodically reviewed and decreased if the cardholder pays the minimum balance on time for six months.

-Delays in payment. It prohibits companies from assessing late fees if the card issuer has delayed crediting the payment.

-Same-day payments at local banks. It stipulates that payments made at local branches must be credited the same day.

-Credit-limit fees. It bans credit-card companies from charging fees when users exceed their credit limits, unless the cardholder has specifically agreed to allow over-limit transactions. In this case, all penalty fees must be reasonable and proportional to the overcharge – that is, no huge rate increases for a purchase that barely tipped the credit limit. If the cardholder has not agreed to allow over-limit transactions, they would simply be rejected.

-Early-morning deadlines. It prohibits issuers from setting early-morning deadline for credit-card payments.

-Statements and notifications. It stipulates that credit-card statements must be mailed 21 days before the bill is due. Previously, the requirement was 14 days. Consumers must now be given 45 days notice of any fee, rate, or penalty increases.

That is part of them.

Now look at the Cons. The first one far outweighs the Pros.

-No cap on interest rates or fees. It does not put a maximum on the interest rates or fees that credit-card companies can charge consumers.

These omissions signal that “the banks still have residual power on Capitol Hill

They can still raise my interest rates sky-high as long as they give me notice.

[napi21]

1. You're obviously not old enough to remember when CC interest rates were capped at 21%

but that's where most of them were set! People have gotten way too used to the teaser rates. I remember how great we all thought it was when some banks were offering rates as low as 12%!!!!!

I also very well remember when it was very very hard to get a MC or VIA card. They ALL had annual fees too. The co. I worked for hired several recent college grads as auditors, and their job was to visit stores all over the country to do store audits. They needed a credit card to get a rental car & a motel room. The SOMPANY had to guarantee the card before any bank would issue one to any of these guys!

CC's have become a part of American life, and there are so many things we can''t do without one, but they have become abused by many people too.

I'm sure no friend of the major banks. I know they will try to get away with more than is legal until they get caught. But they are in business to make a profit. I think these new laws will go a long way to making that profit reasonable.

I personally don't pay to much attention to interst rates on mine because I always pay the full balance 2-3 days before they're due.

[madfloridian]

2. Banks should be required to be responsible also. Should not raise rates on existing balance.

It is not real reform unless it addresses the rates they can charge.

When the rates were that high, we knew they were that high and acted accordingly. The way it is now they are jacking up rates up to 30% on people with high balances.

[Wednesdays]

3. K&R

:kick:

[izzybeans]

4. The bill would have only been meaningful if they forced

credit card companies to recognize the original rates that purchases were made under. Retroactive adjustment of the principle balance.

The teaser rate is one thing, but contracts that stipulate a % rate after the teaser rate expires should be enforceable on behalf the consumer.

They've stolen our money.

[madfloridian]

5. Kick because they screwed us and are bragging about it.

And in another thread I am attacked by NRA folks because I did not think they should have combined the credit card bill and the gun in parks bill.

Now I am considered the worst of the worst in this country...anti-gun. I am not, but it does not matter because our Democrats used GOP issues to lose the credit card debate.

Congrats to us, we deserve what we get