Call for Credit Card Reform Gets Louder
With complaints continuing to roll in about credit card companies, Congress has decided to step up their efforts to control the seemingly unfair business practices of credit card issuers. Cardholders that have never missed payments are seeing their interest rates raised substantially even as the Federal Reserve Board makes cuts to the costs of borrowing money.
While many of the credit card issuers will not comment on their practices, they will say that they are trying to manage risk across their credit portfolios during these challenging times. Risk reduction may be the mantra of the credit card companies but many consumers, watchdog groups and government agencies don’t see it that way.
People that pay off their credit cards in full and rarely ever carry balances are called “convenience users” in the credit card industry. The fact of matter is is that convenience users are not profitable for banks and credit card issuers. So basically credit card companies are trying to get rid of as many of those accounts as they can.
Their motivation is seen to be how much profit they can wring out of their cardholders as opposed to providing a valued service as they would have you believe. It seems as if the issuers are waiting for their account holders to fall into one of the many traps that would automatically trigger higher interest rates and penalty fees. Gone are the days when they make an honest dollar by simply charging interest on the money they loan.
While rule changes are on the way thanks to the Federal Reserve Board, consumers will not benefit from their protection until July 1, 2010. That’s over a year away and offers absolutely no protection for consumers right now. With that in mind Congress has also initiated their own credit card reform bill which they hope to push through before the Federal Reserve Board’s version goes into effect in July of 2010.
Many consumer groups have rightfully questioned why it would take so long to curb these blatantly unfair practices. Call me cynical but I believe it is because the credit card industry has some pretty powerful lobbyists working the halls of Washington. It took the Federal Reserve Board to finally do something and they are not a regulatory agency. That speaks volumes about the control that the credit card industry holds over our politicians.
Related Information:
- Obama Supports Credit Card Reform Now the Obama administration is throwing their weight behind credit card reform....
- Credit Card Reform May Be Moved Up There is a call on Capitol Hill to move up the credit card reform deadline by three months....
- How Credit Card Reform Will Affect Consumers Find out how credit card form will affect you, if at all....
- Credit Card Reform Legislation Passes The House or Representatives overwhelmingly passes credit card reform legislation and now it's off to the Senate....