Credit Card Debt Changes Will Reward Savvier Credit Card Owners
If you’ve been listening to what credit card industry advocates have been saying about the upcoming credit card bill, you are probably worried about your financial future, especially in terms of credit. Don’t be. While the credit card bill will bring a lot of changes to the credit industry, it won’t be the doomsday scenario that the credit card industry would have you believe.
The credit card bill was a direct response of the Obama administration to the growing cry of American consumers who were being burdened by many unfair and downright predatory practices of the credit industry. These practices included arbitrary rates and fees increases, constantly changing contract terms, short grace periods, double billing, large fees and interest rates for subprime borrowers and targeting young borrowers for aggressive credit card marketing even though most have not yet gained enough financial maturity to carry credit cards responsibly.
The credit card bill legislations which will become active around February of next year will definitely put a stop or at least slow down the aggressively profiteering practices of credit card companies. One particular bit of legislation will also greatly empower credit card holders and give them a better chance at keeping their credits in check: the legislation forcing credit card companies to “demystify” their bills and contract languages. In particular, a fully disclosed bill statement will show credit card holders just how much of their “minimum monthly payments” will actually go to paying off their balance and how much will only pay for the interest it accrued. That alone should get credit card holders to be more careful of their credit card use and balance payments.
In fact, while many credit card industry advocates are decrying the loss of credit for American consumers, many consumer advocates are saying that that is not necessarily a bad thing. By foregoing the use of credit cards for purchases, American consumers will actually spend less as they won’t be paying interest rates and they won’t put themselves at a financial risk for paying their purchase using what is essentially a loan. In fact, a tighter rein on credit should make consumers more careful of it and the credit card industry itself will reap some of the benefits as well. For instance, their risk of deferred payments and defaults will be lowered.
In the end, what the credit card bill promises is simply change and, seeing as how the credit card industry is largely biased against credit card holders, it is about time that some changes are introduced into it.
