New Credit Card Law Powerless In The Face Of Reckless Credit Spending
Last May of 2009, Congress and President Barack Obama, created the controversial Credit CARD Act. This act is a set of legislations specifically targeted at eliminating unfair and predatory practices among credit card companies. Creators of this act hope that this legislation would protect consumers from getting gouged by credit card companies and prevent a repeat of the credit card crisis which partly contributed to this economic situation.
The activation of the bulk of the Credit CARD Act is fast approaching – it will activate come February, 2010. However, as the act’s activation comes nearer, it becomes more and more apparent that this Credit CARD Act may not be as good at protecting consumers from predatory credit card company practices as its makers intended it to be.
Granted, the Credit CARD Act does bring some much needed changes in credit card industry practices. For one thing, credit card terms will be more transparent, intelligible and clearer with the act in place. With terms out in the open and presented in a much more understandable format, consumers will be well informed of just how costly their credit card usage will be and they will be able to make informed decisions on how to best manage credit card debts.
The act is also going to limit the way credit card companies can hike interest rates. Late fees and charges for overcharging a credit card will also be much more reasonable and will be related to the violation involved.
However, consumers need to be aware that credit card companies have had ample time to adapt business practices to the requirements of the Credit CARD Act. While that may sound like a good thing – credit card companies complying with consumer protection legislations – it is not.
Consumers would do well to keep in mind that credit card companies are in the business to make profits and a new set of credit card legislations is not going to force them to have a change of heart. The bottom line is that credit card companies are still focusing on keeping themselves profitable, not on complying with this new law.
In the past few months, credit card companies have come up with new ways to circumvent the new credit regulations. This includes adding new fees and increasing interest rates before new regulations prevent them from doing so, moving fixed interest rate credit cards to variable rates to circumvent limitations on interest rate adjustments and many other term changes aimed at keeping their business profitable.
Consumers have always had a huge responsibility to keep their finances well managed. This new credit legislation is no replacement for financial common sense and, in fact, presence of this new law may actually require more financial savvy from consumers.
