Congress Sends Obama Credit Card Bill

By Alan Stewart Carl | Related entries in Banks, Legislation, Money

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Today, Congress sent President Obama the much talked-about bill setting in place new rules for the credit card industry.

The new restrictions will protect debt-ridden consumers from many of the surprise charges common in the industry, like over-the-limit fees and a charge to pay the bill by phone. People under 21 also will find it difficult to get a card.

In addition to outlawing other hidden/unexpected fees, the bill puts into place a measure that will allow credit card holders who miss a payment and see their rates rise to lower their rate back to the original level if they pay on time for six consecutive months.

Of course, there are expected to be some negative consequences:

As banks scramble to make up for the lost revenue, cardholders who pay off their balance in full each month could see annual fees become the norm and lucrative rewards programs canceled.

Annual fees? No more thank you points? I have a feeling that competitive forces will still push credit card companies to offer perks to desirable customers. But I also have a feeling that the lost revenue from the now out-lawed fees will be recouped through various shifts and alterations of still-legal fees and rates. As long as so many of us rely on credit cards, the companies who offer us the credit will find a way to remain profitable.


This entry was posted on Wednesday, May 20th, 2009 and is filed under Banks, Legislation, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

6 Responses to “Congress Sends Obama Credit Card Bill”

  1. rob Says:

    Desirable customers? Why the hell would the credit card companies want me, when they make nothing off me besides 2% on the purchases I make?

  2. Rob - Credit Card Debt Law Says:

    I have no doubt that the credit card companies will try to make up for their lost profits by increasing fees elsewhere. I think the merits of the credit card legislation is that those who act responsibly with their credit are able to handle those costs much better than the people who have become trapped in credit card debt. Society will pay either way as endlessly piling interest rate charges and fees on debtors will eventually cause them to default or declare bankruptcy – so why not give them a fighting chance to avoid it. My only question is why the banks are allowed to keep the “profits” that they have made through their unfair and deceptive practices?

  3. Chris Says:

    I know, that never really made sense to me either. you’d think the customers they want are people who don’t pay their bills. But, maybe they want people who can pay, but just spend too much?

  4. gerryf Says:

    Rob, as you pointed out, they make money off of you every time you purchase things with your card. Two percent (actually, between 3 and 5 percent these days), might not seem like a lot, but 5 percent on what is essentially a short term loan (short=hours) on every purchase made by American’s is like a license to print money.

    Their favorite customer is the one who spends too much each month, but not TOO TOO much, and has to pay to take that finance charge once every two or three months.

    They don’t want the customer who is likely to declar bankruptcy–though that is no longer as big an issue thanks to the GOP and their rewrite of the Bankruptcy laws in 2005, which specifically protects the credit card companies who made bad decisions to issue credit cards in the first place—ah, the GOP….privatize profit, but publicize risk.

  5. kranky kritter Says:

    Let me say this upfront and even more explicitly than Alan. I don’t think these threats of charging annual fees etc to “responsible” credit card users is real. It’s bullshit. Some folks are trying to get people riled up by suggesting that bad socialist Obama is going to hurt the responsible folks again, to help the deadbeats. But it’s not going to happen.

    Customers who pay off their bills monthly still represent a desirable revenue stream. Does anyone think that CC companies are going to kiss off that revenue? I sure don’t. I laughed as soon as I heard this. Yet I saw a blog thread where people went off on all the people who carried debt, ranting and raving and swallowing this spin hook line and sinker. Give me a break.

    The only reason I use my credit card is because its to my benefit…I get itemized statements of purchases, and a little cash back. I’m no dummy…if my card company decides it wants a fee from me, or wants to charge interest from date of purchase, I am gone. It’s that simple. I know how to use a debit card.

    The only way the CC companies could make this stick is if they colluded to make sure everyone did it, and then abided by that collusion. The first is illegal and the 2nd impossible due to, well, greed.

    Some company or other will offer me a credit card with no fee and a minimal cashback vig. Because someone will do the math on how much money I generated for my cc company last year. As someone suggested, it’s about 2% of purchases after the 1% cashback. I use it regularly for things like groceries, gas, and basically any purchase except coffee or a sandwich. My wife does the same. I can gueestimate that we made between 600 and 1000 dollars for the people who gave me my card. Basically without them lifting a finger outside of letting the computers track the transactions, and sending me a bill, and cashing my payment. If they don’t want that money, well then OK.

  6. kranky kritter Says:

    Not gonna happen.

    Let me say this upfront and even more explicitly than Alan. I don’t think these threats of charging annual fees etc to “responsible” credit card users is real. It’s bullshit. Some folks are trying to get people riled up by suggesting that bad socialist Obama is going to hurt the responsible folks again, to help the deadbeats. But it’s not going to happen.

    Customers who pay off their bills monthly still represent a desirable revenue stream. Does anyone think that CC companies are going to kiss off that revenue? I sure don’t. I laughed as soon as I heard this. Yet I saw a blog thread where people went off on all the people who carried debt, ranting and raving and swallowing this spin hook line and sinker. Give me a break.

    The only reason I use my credit card is because its to my benefit…I get itemized statements of purchases, and a little cash back. I’m no dummy…if my card company decides it wants a fee from me, or wants to charge interest from date of purchase, I am gone. It’s that simple. I know how to use a debit card.

    The only way the CC companies could make this stick is if they colluded to make sure everyone did it, and then abided by that collusion. The first is illegal and the 2nd impossible due to, well, greed.

    Some company or other will offer me a credit card with no fee and a minimal cashback vig. Because someone will do the math on how much money I generated for my cc company last year. As someone suggested, it’s about 2% of purchases after the 1% cashback. I use it regularly for things like groceries, gas, and basically any purchase except coffee or a sandwich. My wife does the same. I can gueestimate that we made between 600 and 1000 dollars for the people who gave me my card. Basically without them lifting a finger outside of letting the computers track the transactions, and sending me a bill, and cashing my payment. If they don’t want that money, well then OK.

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