What The New Regulations Will Mean To Subprime Credit Cards
Yesterday we discussed the Federal Reserve’s pending decision on adopting new regulations that will protect credit card users. The new regulation is mainly aimed at stopping credit card issuers from arbitrarily raising interest rates on their customers. It is a good policy and one that we here at www.bestcreditquote.com hopes the Fed will implement as expected.
There will however, be one unintentional side effect to the new rules and it will affect millions of people. As the changes are currently drawn up, they will make it more difficult for people with poor credit to get what are called subprime credit cards. Subprime credit cards can be both secured and unsecured and are issued to people that cannot qualify for standard credit cards due to their credit rating.
While secured credit cards would not be affected, unsecured bad credit credit cards will. Secured cards are backed by money that the cardholder deposits with the issuer. Unsecured cards work more or less the same as their conventional credit card counterparts used by people with good credit ratings but with lower credit limits, more restrictions and higher APRs.
The reason that the subprime credit card market will be hit so hard is because of the caps proposed by the Fed on how much interest the credit card companies will be allowed to charge. As stated earlier, typically the interest rates charged for subprime credit cards are much higher than that of general credit cards.
Some fear that consumers will now turn to payday loans and that is a concern that should be taken very seriously. Payday loans charge interest rates that would make a loan shark blush. We are not at all fans of payday loans and would like to see them regulated, if not prohibited altogether.
As soon as we learn more about the Fed’s decisions at the Thursday meeting we will report them here at www.bestcreditquote.com.
Related Information:
- Federal Reserve To Rule On New Credit Card Regulations The Federal Reserve will weigh in on new credit card rules currently being proposed....
- New Credit Card Regulations Approved The new credit card regulations have been adopted. Find out what this will mean for you....
- New Credit Card Regulations About To Go Into Effect Learn about how the new credit card regulations will affect you. They are set to become law in about a month....