Lawmakers want to reign in credit card lender abuses
Credit card companies are bracing for tough new consumer-protection rules. Under a compromise bill that garnered bipartisan support in the senate recently, credit card companies would be sharply restricted from raising rates or imposing new fees on cardholders who stay current on their accounts.
The bill would also require that promotional interest rates on credit cards last at least six months and prohibit interest rate increases for the first year after an account is opened. Credit card companies would still be allowed to raise interest rates on the accounts of cardholders who are 60 days behind on payments.
The lenders say they’ll be good
President Obama pressed lawmakers to approve the new rules. Railing against what he said was “abuse that goes unpunished,” the President stressed the need “to strengthen monitoring, enforcement and penalties for credit card companies that take advantage of ordinary Americans.” Banks say the new rules will backfire by making it harder for many consumers to borrow money. They also contend that the new rules previously ordered by the Federal Reserve, which go into effect in 2010, address many of the consumer-protection concerns expressed by the President and members of Congress.
When economic times are tough
The credit card industry has other headaches as well. With unemployment soaring, struggling consumers are defaulting on their credit cards at a record rate. According to a recent article in The New York Times, a new federal report suggests that “the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010.”
Bank losses on credit card balances tend to mirror unemployment rates. If the unemployment rate should exceed 10 percent, as many economists predict it will, the losses on uncollectible balances at some banks could be significantly greater than the report predicts.
Neither a borrower nor a lender be
Some experts predict that the credit-card loss rate could eventually surpass the unemployment rate because of the compounding effects of the housing crisis and the low Consumer Confidence Index. Many experts say the report actually understates the size of credit card losses. For instance, industry consulting firm Oliver Wyman foresees total banking losses topping $186 billion by next year. As for the paltry $82.4 billion loss predicted in the government report, “We will blow right through it,” said Inderpreet Batra, a consultant at Oliver Wyman.
These companies are lying right to your face when you sign the contract. They say that you have a fixed rate, not introductory rate, fixed. then when the economy goes your rate not only doubles but almost triples. If the government is going to let them lie to you, you have the right to file chapter 7 on them. They have the credit cards that you put money into and help build your credit back up. It is ashame that these regulations were not here before the credit card companies started issuing cards, the government should have thought about this before. And the banks want the government out of their business, wonder why that is??????
Credit card companies often have packages, promotions, and offers to increase your credit limits. If you already know you can’t handle your money wisely or if you’re in debt already, do not accept these offers.