|
 |
|
New Credit Card Laws and Your Rights |
 |
by: Debbie Dragon
Recent changes in US credit law are set to loosen the stranglehold many credit card companies have over their customers and wrestle some of the power back in favour of the consumer. The law (passed on the 20th August) is the first step in what is being seen as the biggest overhaul of the credit card industry in two decades.
Credit card companies will now have to allow clients at least 21 days to pay off their monthly bills, in addition to providing 45 days warning before any major changes in their credit conditions. The new timescales, up from 14 days and 15 respectively, will give those struggling to pay their debts much greater breathing room and prevent any extra charges occurring through late payments.
Although the pendulum of power is still firmly in the grasp of the major credit card issuers, the new rules will be a welcome sign for those struggling to effectively manage their credit debt in the recession. The terms of the law also make it possible for customers to reject the terms of their new conditions (issued at least 45 days in advance) and take steps to cancel the debt and close the credit account. The good news for consumers doesn’t end there because set for implementation in February is a law which will restrict the ability of credit companies to freely impose fees, raise interest rates or sell credit cards to students. Such major shake-ups will inevitably have a stabilizing affect on the economy and ease the financial pressures on the consumer.
Credit Card Companies Fight Back
What’s good for us is rarely good for the companies though and there has been much talk recently about credit card companies charging annual fees as a way to bolster their profits, while they still have the freedom to do so. In June, Fifth Third Bank implemented a $19 on customers who had inactive accounts for 12 months, while Chase has recently introduced a $30 annual charge to some customers of the Freedom credit card. In a time when money is tight for everyone it seems that credit institutions are still hell-bent on continuing to increase their profits by any means necessary. Some experts argue that things such as annual charges are necessary step for credit card companies to take. By never having a balance on your card you are effectively getting a service for free; in this instance the automated payment system operated by the likes of Visa, MasterCard and American Express. Charing items to your card will incur a cost to the company (i.e. processing the transaction) and if they can’t rely on the interest to offset these then some other means must be sought.
Therefore, in reality, being a “model” borrower and paying off your debts on time isn’t what the company wants because ultimately their profits suffer. Introducing annual charges is a way for credit card companies to compensate for the disciplinarians who never make a late payment. While the new laws will help struggling borrowers in the short term it seems that they’re simply another stumbling block the credit industry has to negotiate on the road to huge profits. This begs the questions, should you be a “model” customer and face paying a plethora of stealth charges, or is it better to forgo any sense of timeliness when paying your debits? Either way it seems that the power to dictate the future of our credit card activity still lies firmly with the companies and no matter how much the government intervenes the consumer will continue to get the short straw.
|
Did you find this article helpful? |
|
|
Credit Card Articles > Credit Card Education > New Credit Card Laws and Your Rights
|
|
|
 |
|
