The Credit Card Bill Promise And The Credit Card Industry Reality

This year, the Credit Card Act of 2009 was passed. The bill was aimed at curbing several unfair and abusive practices being committed by credit card companies against credit card holders. Here are what the much touted credit card bill promised:

1. Credit card bills will be mailed to credit card holders 21 days before the bill’s due date.
2. Credit card agreement changes would need 45 days of advance notice
3. Consumers are given the right to reject interest rate changes but will have to cancel their credit cards and pay off their existing debts within 5 years which might translate to a higher minimum monthly payment rate
4. Credit card payments would go primarily to the balance with the highest interest rate
5. Interest rates on existing balances cannot be raised by credit card companies unless the borrower is delinquent for a period of more than 60 days
6. Double cycle billing and universal defaults will no longer be allowed
7. Credit card companies will be required to provide full disclosure of interest costs, fees and other credit card rules

Many had high hopes that the credit card bill would revolutionize the way credit card companies do their business, mainly making their business practices fairer for credit cardholders. However, when congress decided to give credit card companies up to February of next year to adapt to the credit card bill, credit card companies took it as an opportunity to increase their profits before the bill went live and to change their business practices to protect their profit margins instead. Here are a few of the things that credit card companies managed to do before the credit card bill could activate.

1. Credit card companies moved their fixed rate interest rates to variable rate ones. This move exempted the credit card companies from the requirement for informing credit card holders 45 days in advance for interest rate changes.
2. Credit card companies also brought back annual fees and increased other fees including balance transfer fees, cash advance fees and international transaction fees
3. Awards programs were downsized and credit card holders experiences massive credit limit cuts. According to recent figures, credit card companies canceled more than $500 billion worth of credit lines too, closing accounts even for credit card holders with good credit scores.
4. Minimum monthly payment rates were raised and stricter standards were implemented for new credit card applications
5. Credit card companies also aggressively increased the interest rate of credit card holders regardless of whether they were risky borrowers or not.

Clearly credit card companies already have the credit card bill beat. Right now, credit card holders are suffering from massive financial losses due to high interest rates and restrictive fees from their credit card companies. It seems that the credit card bill may not be working out as originally intended.