August 20, 2009
-
Reflections on New Regs, Pt.2
As things smooth out.Again, the most sweeping credit card regs won't go into effect 'til February of next year. These will be things like arbitrarily jacking interest rates to extremes and peddling credit cards to minors (under 21 years of age). The most significant effect of this first phase which went into effect today was the burden of credit card lenders to mail out billing statements to consumers at least 21 days before payment is due.
To some credit card consumers, this will have little effect. It's most wise to pay credit card bills as soon as they arrive in the mail. It makes very little sense to play with fire. Still, some foolish individuals like to play with fire and then complain when they get burned. The segment most effected by this change will be those unfortunates who have become victim of unscrupulous lenders who deliberately (or carelessly) take liberties of mailing bills out late and then processing the payments late. Percentage-wise, this segment is small. Population-wise, the number is substantial. It almost seems as though, some lenders are out to get the hapless. A word of warning to those who would play with fire and wait 'til the last minute to make payments, expect penalties to become more stiff and consequences to become more severe.
Another major regulation involves advance notice of significant credit card account changes. These could be things like substantial rate hikes or switching the account to a variable rate which can change at any time. From now on, the consumer must be given a minimum 45 days advance warning before the change will take effect. The main significance here is that the consumer will have notice beyond the current billing cycle (one month). This replaces the scant 15 days notice of the past, leaving a consumer little time to prepare.
The next change of significance is the provision which allow consumer to protect themselves in the cases of adverse changes to their credit card accounts -- the "opt-out" provisions.