New Credit Card Act in Effect Today

Today is D Day for all credit card issuing banks. It’s the day that the credit card reform act, otherwise known as CARD, goes into effect, and the day that they stand to possibly lose millons, if not billions of dollars in lost revenue. Let’s talk a little bit about this act, what it does for consumers, what good may come of it, and what potentially may be bad from it, since it probably will adversely affect a business – the credit card business, and right now our economy may not be able to suffer another blow like that although credit card reform in some manner has definitely been needed for years now.

Much of the reason for the loss of revenue for the credit card companies though, is actually a good thing for consumers in the end. The primary reason behind the loss is that they will be very much more restricted in how and when they can raise a consumers credit card interest rate. That’s right, no more arbitrarily raising credit card interest rates any more, one of the biggest reasons people have a love/hate relationship with credit cards.

There has to be certain warnings in place and specific guidelines for them to be able to raise their rates. This is a very good thing for customers, since this is the reason that lots of people found themselves in undiggable debt that they could never seem to pay down. Many times their interest seemed to outweigh the purchases on their credit cards, especially if they were consumers with credit cards for bad credit, where raising rates instantly seemed to be a very common practice.

This part of the legislation, I applaud, and look forward to, because I myself was the victim of credit card companies raising their rates on me over and over, and it’s the main reason that, after I got out of college, I had to seek the help of a consumer credit agency to help me consolidate my debt and make it manageable so I could actually hope to get out of debt one day.

Another piece of information I read about credit card issuers trying to gain back some of the lost revenue, is that they are introducing tons of new fees to try to make up for the lost revenue in raised interest rates. I wondered why I suddenly saw a foreign transaction fee of almost eight dollars for a transaction that I do on my business card several times a month – up until now, with no fee. Chances are, you will be seeing ridiculous fees as well to make up for their loss.

I’m not sure how good this will be. Honestly, it feels like the intentions are good, but right now, with consumer spending already so restricted, is this really going to help the economy get back on it’s feet? Sounds like it may be bad timing for a long overdue reform in the credit card industry. I know it needs to be done, but it’s just going to become another weight on the tight credit market and restricted consumer spending right now.