The credit industry is abuzz with the upcoming activation of the Credit CARD Act. Going live this month, the Credit CARD Act actually got signed into law last year, in May. The law is meant to protect credit card holders from credit card company unfair practices. Unfortunately, credit card companies are not going to give up easily on the resulting financial losses resulting from such protection. Also, the Credit CARD Act itself is rife with loopholes which threatens to take away what slim advantage credit card holders gain from it.
One example of this is credit card protections applicable only to fixed rate credit cards, not to variable rate ones. The law prohibits interest rate hikes on new credit cards and makes it mandatory for credit card companies to give advance notice to card holders when their credit card terms are changed. However, these rules are only applicable to fixed rate credit cards. Variable rate credit cards are not eligible to these protections and credit card companies have taken advantage of this and have moved many of their fixed rate credit cards to variable rate ones. Credit card holders who are lucky enough to find a fixed rate credit card would do well to stick with them. The bad news is that fixed rate credit cards are becoming rare and what cards there are will usually carry very restrictive terms.
Credit card holders ought to be careful with the rewards programs that credit card companies are offering nowadays. With the loss in revenue that credit card companies are seeing caused primarily by the new rules in the Credit CARD Act, they are now looking for ways to generate additional revenues. One of the most likely avenues that they will explore will be in their rewards program fees. Credit card holders should scrutinize very well their credit card rewards programs to make sure that they do not pose any financial risks.
Consumers who want to get rid of credit cards in light of any new credit card term changes that they do not agree with should consider their choice carefully. Without a doubt, it is a good idea to get rid of credit cards that have become risks instead of assets, but consumers must consider the resulting drop in their credit scores which may pose a bigger problem down the road. Still, credit scores are really of utmost concern if the consumer is planning to apply for a new loan or wants to renegotiate the terms of any debts that they have. For consumers who do not have to worry about either, getting rid of their unwanted credit cards is probably the best move to make.