March 9, 2010
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New CC Regs -- Rate Jacks, Pt.2
Almost there...Thanks to Senator Dodd and a few good men like him, credit card issuers are no longer allow to jack interest rates on old debt. What this means is that, responsible credit card consumers who wisely calculate and budget debt (financing) according to what they can afford to maintain based on the interest rate at the time, will be able to stay with their responsible plan and keep up the payments. If their credit card interest rate should triple tomorrow, it will not effect the current payment plan because yesterday's debt is locked into the interest rate in effect when the debt occurred.
Only new debt can be effected by a rate hike. The only debt to subjected to the new finance rate is debt charged after the change and with the full knowledge and consent of the credit card consumer. The consumer would wisely decide to change to a different credit card and the greedy violator would lose a good customer (as it should be).
As good as this outcome is, however, all has not been rosy over the past year-and-a-half. As right as these changes self-suggest, when this reg. was passed, the credit card industry made a squawk heard in the high-heavens (or at least as far as Mars). They claimed that, in order to comply with this radical change they would need years to revamp their internal structure and get it implemented. The Congress was compelled to make a compromise and stage this change to not be implemented until the second phase of the three-phase approach the bill was eventually carved up into. That second stage only went into effect last month (February 22), a year-and-a-half after the bill was signed into law.
We may never know what took place behind the closed doors of those boardrooms during that time but even the most isolated observer could not escape seeing what the credit card industry was doing with that time. In an all-out effort to defeat the protections the bill was designed to provide consumers, three immediate initiatives quickly followed: