Credit Card Now

The Credit Card Accountability Responsibility and Disclosure Act (CARD) put into place in the early part of 2010 has promised changes to the way the credit card business is run. These changes are being implemented in installments, much like a payment plan.

Changes to the Regulations
The new credit card regulations require companies to implement the following changes immediately:

• More advanced notice from the credit card company before raising interest rates.
• The credit card statement must be mailed 21 days in advance of the payment due date.

Additions to this new set of rules are set to take effect in 2011. These rules will include the following:
• A ban on interest rate increases on preexisting balances.
• Limits on over-limit fees that can be tacked on to card statements.

Getting Creative
Some of the changes are set to take place this week. It will be interesting to see how these changes play themselves in the grand scheme of things. Although the rules were designed to protect credit card holders it seems that lenders may be the ones who actually have the greatest benefits from these new regulations at least in the short term.  What appears to be happening is that card issuers seem to be retaliating against the newly minted regulations enacted, originally intended to protect cardholders from onerous fees has resulted in card issuers getting very creative in their efforts to recoup the losses from old practices they can no longer employ.

Credit card companies are looking for a way to make up for lost revenue. This revenue once came from fees and chargers that are now regulated by laws. Credit card companies will be loosing money because they can no longer hike up fees or change rates without proper notice or without just cause. Desperate times call for desperate measures.  Higher annual percentage rates or annual charges for card use may be just the way that this lost revenue gets recouped.  Consumers may even be charged for paying off their balance in full, or incurring a charge for receiving a paper statement in the mail.  There are still things that are not regulated and credit card companies desperate to keep their revenue at a certain level may get creative in an effort to make money.  It is possible that some retaliation is going on and consumers are getting caught in the crossfire.

Helpful or Harmful?
Is it possible that the credit card companies are retaliating against these new regulations in a passive aggressive fashion?  Some credit card companies after learning of these new laws made immediate changes to their rates and fees before the laws actually went into effect.  Rates and fees for some cardholders have increased in past months just in time for new regulations to take effect.

The credit card company is required by law to inform cardholders of changes to rules.  Given the massive amount of mail that people receive on a weekly basis, these informational letters from credit card companies are likely to get tossed in the trash. Pay attention to any correspondence that you receive from your credit card company. This little piece of junk mail could contain information about fees, rate changes or increases that will affect cardholders significantly.  The credit card reform act is just beginning to get started. Already consumers have to be on guard to ensure that the act that was designed to protect them has not already cost a fortune to individual cardholders before all of the rules having even gone it effect.

Losses and Gains
U.S. Bancorp is one of the fifth largest banks in the country.  After reviewing their first quarter earnings for 2010 the bank saw a rise in earnings from just last quarter.  This rise in the banks revenue is reported to be due to the banks credit and debit card customers paying higher interest rates, ATM fees and stricter penalties for late payments.   The bank still reports an increase in losses due to defaults but amazingly has a .08% increase from just last year at the same time. U.S Bancorp does not appear to be alone in their increase in incomes in the first quarter of 2010.  Other major banks and credit card lenders such as JP Morgan, Bank of America and Citibank also report an increase in credit and debit card revenue.

Tough economical time, the increase in losses due to credit card account defaults and the implementation of some pieces of the new regulations, do not seem to damper the revenue being earned by the card issuers. According to reports, many card issuers are actually growing their earnings. These earnings are coming directly from some type of increase in consumer based fees.  It appears that despite the new credit card regulations that have just begun, consumers are still being charged while the credit card companies are reaping the rewards. This creative approach to ensuring the bottom line may just be retaliation against the new regulations that are set to take place.

Similar Posts:

• Nine Months Later, Credit Card Reform Arrives
• Third Phase of Credit CARD Act Finally Arrives
• Credit card law may boost spending
• New Credit Card Limits: Will Consumers Feel the Heat from Rate Caps?
• Legislators to Debate Credit Card Rate Cap

Tags: Card, Card Issuers