Future Credit Card Rules and You

By Stephen Mazeika
 

Expert Explains how Approved Regulations Will Help Consumers
 

It’s the start of 2009, and I doubt anyone would argue against the fact that the world economy and consumers as a whole have seen better times. Never has the Federal reserve chairman and board and our government as a whole been so hands on in trying to stabilize a sinking ship, with continually manipulating interest and lending rates and providing emergency bailout money to aid institutions in key industries to keep them afloat.

So what does the future hold in this increasingly volatile financial economy, and is our government going to continue to look out for consumers as well as big business?

Fed Enacted Changes Take Place in 2010
 

Personal finance expert Jordan Goodman recently appeared on CBS’ Early Show and spoke with Maggie Rodriguez about some of the new initiatives Americans can expect to see from our government. Many changes have been passed recently in hopes of an economic climb out of the current recession, and most are set to take effect in 2010.

Here’s a list of the changes, and what Goodman had to say about each while on the program:

Credit institutions banned from raising rates on existing balances unless customer is at least 30 days delinquent in monthly bill payment
"They're not going to raise the interest rate if you've been less than 30 days late,” Goodman said. “In the past, if you were three days late (for instance), they would hit you. That's not gonna happen anymore. So that's a really, really good thing."

Termination of “universal default policy”
"They're not going to increase interest rates if your payment is missed on another card. ... If you miss on your phone bill or something like that, the credit card companies see it and raise all your interest rates to across the board. That's what's called the 'universal default clause.' That one's gonna be gone, too."

End of “double cycle” billing
"No (more) retroactive interest. This is what's called 'double-cycle billing.' You've paid your bill for the last month, but you're still paying interest, even though you've paid it off in the past. It's outrageous. So, they're gonna stop double-cycle billing. That's a really very, very good thing."

Easier understood monthly statements
"Those things have got all sorts of legalese and (are) very difficult (to read). (Banks are) supposedly going to make it much easier to read, so you understand the interest rates, you understand the late fees and all that, so that, hopefully, should make things a little bit better."

Banks and Lending Institutions Likely to Oppose Changes
 

There’s no doubt that most banks will protest these reforms as they stand to lose revenue with these implementations.

"The banks are going to really battle on this one," he said. "They're going to lose about $12 billion in income from these kinds of things. So, they're [going to] try to make it up in other ways.”

Consumers can be pleased to hear that in addition to the bailouts and intervention associated with large institutions within the last 2 years, it appears that the government is doing its best to look after them too. These measures clearly aim to alleviate current debt, educate consumers to avoid future problems, and clarify and mediate the transactional relationship between lenders and customers. The Fed hopes that these changes coupled with other measures may help to steer our economy back in a positive direction.