The first phase of the Credit CARD Act of 2009 goes into effect, Thursday.
Technically, the "CARD" part of the legislation, signed by President Obama in May, is an acronym for "Card Accountability Responsibility and Disclosure." The law means a host of consumer-friendly protections for card users, involving things like regulating retroactive interest rate hikes on old balances, controlling over the limit fees and offering longer advance disclosure periods for rate changes.
However, there are some "unintended consequences" with the new the law. Generally speaking, credit-card companies interpret "friendly to consumers" as "harmful to profits." So card issuers are busy pruning their account-holders prior to the law's effective date (a second phase will take effect in February). So, if you carry a balance on a credit card - chop! If you have open-but-dormant credit accounts - chop! And as tonight's report shows, even card users with good ratings and no carryover balance on their cards each month, are getting the axe.
The last two decades have been a marked period of "easy credit" for consumers; we've all gotten used to the idea that new credit offers will always arrive in the mail or be offered online. And it wasn't that long ago that card companies encouraged carrying a credit balance by making it easy to transfer balances from one card to another. No more. Longtime observers like Curtis Arnold, the founder of CardRatings.com, believes we're seeing a permanent change in the credit-card landscape -- from no-regulation, to some-regulation. You may still get a card solicitation in the mail, but you probably won't receive as many. And the adjustment period is going to be tough - for card-issuers and consumers alike.
Comments
I am not worried about my credit cards as I don't really use them either. I can do without. What has me going is the new part of the act that requires 21 days notice of loan payment due. I have a car loan that I pay twice a month. My payment is now going up $30 dollars. I am assuming that will be to cover interest. So I get to pay $30 dollars b/c they think I need 21 days notice? I chose to make payments that way. If I don't make it on time that's my fault. Anyone else have this happen to them?
I cut up my American Express and my MasterCard, and I now use a debit card for purchases that require a card (internet purchases) and cash for everything else.
this may explain why tons of old Washington Mutual credit card holders are being given the axe now after Chase has taken over. I was one of those people that paid more than the minimum payment every month religiously on my credit card, having a $900.00 balance on a card with a $2,000 limit, thinking there was not a problem until one day when I tried to pump $10.00 worth of gas into my car and my card was declined. I called cust. service and was told my account had been closed. I searched online and found a website called consumeraffairs.com that has literally hundreds of complaints about chase doing the same thing to them and in all situations, the cardholders were ex-WaMu customers. Apparently Chase does not want WaMu's customers and is giveing them all the axe.
I haven't used credit cards in years and have survived quite well. The entire credit industry was rigged to force people to run up debt.
The "credit score" game is only in place to entice people into debt so they can improve their "score".
What kind of stupid insanity is that ?
Tightening the consumer credit card market can't be a bad thing. I was fortunate enough to be able to cut up my credit cards last year and I haven't missed them one bit! An even bigger bonus is not getting credit card offer "junk mail" that clutters my mail box and is an ecological nightmare. The credit card companies are definitely at fault for pushing easy credit. If you haven't seen it, check out the documentary "Maxed Out."
Wow.... I sent a hate mail back to American Express with my card chopped up in the envelope for the rate hike they tried on me. LOL.... Guess they should have no issues with closing my account. I didn't really need it anyways... now I know what was happening though. It doesn't make my message less valid though and it doesn't make me want to close my account any less. I hope this all goes through.
i think credit card companies should do what they have to do. if they continue to be abusive then there's nothing preventing the public outcry for politicians to enact further, harsher legislation. replacing credit cards with cash cards is a better way to live w/in ones means but you get dinged for not having a "credit history."
Ah, so this explains why Amex decided to cancel my dormant card which was currently racking up "longest history" points for me in my credit score. Thanks!
If we can't use credit cards responsibly then it is better the card company limit the credit. Plus we don't need to be charging up credit on the cards anyway. Since there is no individual accountability, the unintended consequences are better.