June 23,2009
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Who are you kidding?, Pt.3
Without deception and treachery, how can a bank survive?So, the major credit card lenders are in a pickle (or, so they claim.) They can’t seem to make ends meet unless they trick people and impose unfair changes on their credit card clients. Sen. Dodd's new CCARDA bill, they say, will cripple them by taking away these rights. What do you think? Coming soon to a courtroom near you:
1) Credit card lenders will no longer be allowed to simply jack interest rates without notification. There will be a mandatory provision of at least a 45-day notice a before substantially raising APR rates on new transactions.
2) Further, if credit card lenders deem that a substantial rate hike is necessary, they must show justification beyond just "needing more money". It will be a tough case to prove that consumers who have done no wrong need to have their rates substantially hiked. In short, the lenders must show 'reasonable cause' in order to get approval for major rate hikes.
3) The "black art" of juggling credit card payment due-dates, leaving insufficient time to pay on time stops here. Many lenders, now, are slamming consumers for knit-picky technicalities by creating 'trip-wires' to make people fail. Then the credit card lender will throw well-meaning credit card consumers into default for one or two late payments over a year's time and double the interest rate coupled with excessive punitive penalties and fines. This behavior is going away because of mandates that will afford reasonable time for credit card consumers to make payments. Delinquency status classifications will be established, regulating the appropriate measures banks are allowed to take concerning these.
4) Millions of credit card consumers have felt the shock of learning that their long-time running balances are jumping to a significantly higher interest rate. This huge segment of consumers are unique in that, although they have done nothing wrong, they are being slammed to new rates they can ill-afford. The fact is, they have been model consumers who willingly pay huge sums in interest charges to the lenders every month. These are the lenders' "cash-cows" and the lenders should be treating them well. Truth is, most banks do and it's only a few bad apples who are hurting the reputations of the other banks. New regulations will soon control unjustified rate hikes on existing balances. Only applicable portions of credit card debt will be affected by necessary rate hikes.