Last May, President Barack Obama signed into law the credit card bill. The credit card bill introduces several regulations that aim to help credit card holders get fairer treatment from their credit card companies. The bill contains regulations that will stop the arbitrary raising of interests and fees, minimize the offering of credit to high risk consumers such as those below 18 and force credit card companies to have clearer and more easily understood languages on their credit card agreements and bills.
Many of these changes would certainly help in reinvigorating the finances of many an American consumer. Unfortunately, the bill will not become active until February of next year. In the meantime, credit card companies are doing their utmost to change their credit card terms in an effort to earn as much as they can now and to prepare for the credit card bill when it becomes active.
Right now, many credit card companies are raising interest rates to very high levels. They are also increasing their fees for most credit card transactions such as balance transfers and cash withdrawals. This is because, when the credit card bill becomes active, credit card companies won't be able to raise their interest rates and fees just as easily. Because credit card companies also see that credit is going to be harder to secure next year with the bill in place, they are also cutting available credit right now. Thus, many credit card holders are finding that they have less and less credit available in their credit cards.
The effect of these drastic steps among consumers is quite devastating. Many credit card holders are already having a hard time paying off their debts. With the increasing interest rates and fees, many are finding it more and more difficult to continue paying their bills off. It is not hard to see that the number of delinquencies and charge-offs may soon rise. With their available credits cut off, card holders are also finding that they have lost what little financial leeway they had to maneuver. More and more credit card holders now find themselves in a high risk of going bankrupt.
Credit card companies are also not reserving these drastic steps for their less than stellar borrowers. Credit card holders with high credit scores are getting hit just as bad. What's more, what the credit card companies are doing are also having a large negative effect on most credit card holders' credit scores.
While a lot of people are thinking that the activation of the credit card bill will save them from credit card problems, the credit card industry is now making sure that that is not the case. Credit will become more expensive by then and only time will tell if that is a good or bad thing.