Debates about how good or bad the recently passed credit card law is has been going around even before the legislation got out of congress. There have been some valid points voiced out but, in the end, the credit card law is simply a compromise so that the credit card industry and the consumers survive the on going economic crisis and, perhaps build a better relationship between credit card companies and consumers.
The credit card industry found itself on the verge of collapse when, at the outset of the currently ongoing economic crisis, credit cardholders began defaulting on their credit card payments. The industry found itself especially vulnerable because, for the past few years, they had been profiting mainly from credit cardholders who could reliably pay off the penalty fees, not the their debts. The credit card industry had found these types of borrowers to be virtual goldmines as they continued to pay the credit card companies without really seeing any substantial decrease in their debts. The profits the credit card companies took from these types of borrowers have not been publicly released but experts estimate the value to be quite staggering.
When the economic crisis hit, weak borrowers were the first to default. Coupled with the dry up of employment, the credit card industry soon saw record levels of defaults. In an attempt to stem the flow and recover, they raised interest rates and fees, even for their credit cardholders who maintained a good credit standing. The result was a national outcry that led to the formulation and eventual passage of the credit card bill.
The credit card bill addresses many credit cardholder concerns such as: unfair interest rate hikes, obfuscated industry practices and other predatory credit card practices. While credit cardholders are getting plenty of breaks from the credit card law, they won't be given credit on a golden platter, either. Interest rate hikes will be controlled but, if the credit cardholder continues to perform poorly in terms of payment, they will get hit with high interest rates. Many predatory practices of the credit card industry will be curtailed but they credit cardholders will have to take responsibility for their credit card buying practices.
The credit card industry will certainly lose a lot of their profitability when the credit card law becomes active. However, it does not mean that the system will collapse entirely. They will just have to adjust to a less aggressive style of doing business. They basically have to return once again to basing credit availability on the capability of the borrower to pay off debt, not on how much they can profit from him.
In the end, the credit card bill simply reinforces what was once common practice in the credit industry: credit available where credit is due.