Well, I guess the saying is “good things come to those who wait”, and apparently consumers can expect good things regarding new legislation in the credit card industry in the year 2010.
After more than 60,000 people wrote into the feds demanding changes, the biggest changes to hit the credit card industry were put in motion and will take effect in July 2010. Some of the changes include:
- blocking card companies from applying higher interest rates on existing balances.
- Late fees could not be charged without giving consumers at least 21 days to make a payment.
- Banning of two-cycle billing
- Any payment consumers make beyond the minimum must be applied to the balance with the highest interest rate or spread proportionally to all balances.
While these changes are good news for existing cardholders and will prevent the mysterious charges that sometimes occur on existing credit card statements, it will actually serve to raise the rates most new credit cardholders receive when applying for new credit. Consumers will probably not notice as many 0% offers in their mailboxes because the credit card industry won’t be able to afford to offer the lower rates (since it can’t increase rates on existing customers!)
According to a study by law firm Morrison & Foerster, these new changes in the credit card industry may reduce the credit card industry revenues by $12 billion per year.
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