New Credit Card Act: Leftovers for the Little People

Crumbs have finally landed from the TARP handouts for the consumer-taxpayer, and a cap on credit card rates was soundly defeated using lobby dollars of the credit card industry.

My assessment after reading the entirety of H.R. 627: a step in the right direction to placate the growing ranks of consumers who desperately need relief from the outrageous usury practices of the credit card industry, but nowhere near as effective as advertised.

The term “Little People” is a term of art, and used affectionately. I have no idea how tall credit card users are these days, but I count anybody outside the immediate payouts of TARP funds to be ‘little’ in comparison. They’re my people: the people I work for, and grew up with.

The Good

1. Increased disclosures to consumers concerning credit card terms
2. Elimination of double-cycle billing
3. Measures to counter over-the-limit fees
4. Credit card bills would be paid on the same day each month
5. Restrictions on increasing charges and rates for newly issued cards
6. Requiring AnnualCreditReport.com to be advertised through credit report providers*
7. Restrictions on ‘ninja fees’ for gift cards
8. FTC will oversee efficiency of how credit cards are closed for estates

The Eh

1. Companies can lower interest rates for consumers using review process established by credit card companies

Concern: Effective 15 months from Obama’s signature, and we haven’t seen details of review process that will be established by credit card companies and approved by Board

2. Those under 21 need a cosigner or must assert eligibility through application

Concern: no measures proposed to double check accuracy of application

3. Colleges should restrict access to credit cards on campuses

Concern: no teeth. They should get rid of the bowl system, too.

4. Studies authorized to assess PIN security, cross-marketing of credit cards and security for small business accounts

Concern: Fluff. So glad we need Congress to pass laws to look into things.

5. Congress will look into shifting credit card fees at point of sale (interchange fees)

Concern: Congress effectively tabled the issue. Learn about it here.

6. The ability of the consumer to afford a credit card will be considered

Concern: This could mean less cards issued – and more depsperate measures taken by consumers to qualify for them.

The Ugly

1. Penalties for credit card companies aren’t severe enough if they violate the Act ($500-$5,000 per violation in some cases)
2. Effective date of Bill on most measures won’t occur for another 9 months
3. The practice of usury at the high interest rates consumers suffer from for rates and penalties, will continue

And The Interesting

1. Stored Values of credit cards and purchasing information will be regulated, in part to help us fight terrorism (allegedly)
2. I can conceal a loaded weapon in national parks like GW said I could when he left office

*I like this one. I’ll ask my clients if they know where to get a free credit report and a good percentage respond “FreeCreditReport.com” (which isn’t free.)

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