March 15, 2010
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New CC Regs -- The Rest
Transparency & Minors.This article series is referenced by the news article entitled: 'New CC Regs - A more-level playing field'. Please refer back for the basic overview. Now, we're down to the end. Of the three phases of credit card consumer protections, we're two thirds of the way there. The ultimate goal of this whole initiative is to prevent the credit card issuers from preying on the vulnerability of hapless consumers who don't read (or understand) the fine print. People who are credit card junkies. The young and tender trusting ones. Because of the inability (or lack of sophistication) of some to manage finances and find themselves in financial straights. Case in point:
At the end of last year, the average American was $5,400 in credit-card debt. Though the credit card industry doesn't seem to see it, these measures protect them as much as anyone else. Just last year alone, U.S. banks were forced to write off about $35 billion in uncollectible credit card debt.
In desperation, they were resorting to the unacceptable practice of levying the unfair 'universal default' on people. This is where a person already in straights will be nailed again by debts totally unrelated to credit. It could be an unpayable huge medical bill or even something so menial as a late cable TV payment. Credit card issuers will use these mishaps to nail credit card customers with further punishments. This will all be stopped.
These last items attempt to wrap up the loose ends in hopes of protecting the more vulnerable credit card consumers. Those would be the unsuspecting adults and minors.
Now, billing statements must explain the dangers of credit card consumers only making the suggested minimum monthly payments. They must explain in bold print how long it will take to pay a debt off in full. Once people realize it can easily take over 20 years, many will strive to pay ahead to avoid that terrible fate. This should alleviate one of the worst abuses of entrapping the most vulnerable.
Especially vulnerable are the young on college campuses who have been subjected to unscrupulous aggressive marketing. Now, credit card issuers will only be allowed to issue accounts to students who can prove their ability to repay what they charge. For anyone under 21 who can't prove their ability to manage the financing, an adult over 21 must co-sign.