CARDS Act fun!

Beaucoup De Credit ⓒ Joshua Plant 2008

In 2009, credit card companies collected $22.9 billion in penalty fees from consumers, which is up nearly $4 billion from 2008. On February 22, the latter portion of the CARDS Act of 2009 will be implemented in an effort to help protect consumers and bring an end to erroneous fees. But, what is good for consumers is bad for profit margins; however, this is only good for some consumers and it screws the rest.

The New Rules, as of February 22, 2010:

  • Promotional offers on college campuses and at college-sponsored events are now illegal
  • Persons under 21 must have an adult co-signer to open a new account; exceptions will be made for those whom can provide proof of independent means
  • Death to double-cycle billing
  • Allocating payments: payments over the minimum must be applied to balances with the higher interest rate first, and subsequent balances thereafter.
  • Over-limit fees: consumers must be given the option to opt in for the ability to overdraft one’s credit line

These are just some of the new rules that are coming into play. The former part of the law was enacted in August of 2009, changing several terms of use; including:

  • Universal defaults
  • Extending the mailing period before a bill’s due date from 14 days to 21
  • A 45-day notice must be given before an interest rate hike; and
  • There must be a clear and concise explanation of the Right to Cancel

Same Sheep Different Farm:

Now that the nation’s banks have had $50 billion in revenue ripped off their balance sheets, they have to find a way to make up for the lost revenue. Solution: bombard consumers with fees left and right! The banks are going to, if they have not already done so, charge their customers for “processing” fees for paper statements, swap fixed interest rate cards to variable rates, tack on annual fees and much more!

I am missing the part where this helps the consumer…

Granted, yes, there are several good things to come out of this law, but it does not really protect us. It simply cleans up some ridiculous clauses and fees in our TOS and swapped them for more “transparent” fees.

One must have credit cards to get a good credit score, better interest rates on mortgages, loans, and so on. But, how much are we losing in our profit margins when we are paying out the ass in fees?

For people like myself, many of these new rules are only adding to our costs and eliminating rules that rarely apply. I never overdraft nor do I worry about my interest rates because I tame my credit card use and anything that cannot be paid for in cash, isn’t purchased!

But, now my interest rates are going up from under 10 percent to god knows what Monday morning. Welcome to the land of inevitable annual fees, and variable rates!

All of us “good” customers are being screwed, so the poor can continue to spend irresponsibly and the banks can continue to profit from reckless behavior.

Thanks CARDS Act!

Your Best Line Of Defense:

Call your credit card companies and talk to them. See what you can do to keep your rates low, your fees down and what your standing is with the company. In the past, they have been willing to work with their customers that are in good standing; although, they seem to be alienating them now.

What you should not do is close your accounts! If you close them, your debt-ratio will be out of whack and can do more harm to your credit score than good. Work with the bank the best you can, and tame your use.

There isn’t much else we can do. We are slaves to the banks and that isn’t going to change anytime soon.

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