December 15, 2008
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News: The New CC Regulation Changes.
The new regulatory changes due out on Tuesday are expected to provide sweeping changes to protect credit card customers. Amidst a flurry of complaints from credit card consumers, the government has deemed it necessary to take some action. The lending banks and institution are in turmoil over the ramifications. Basically, they involve:
1) Restricting the lenders levity to raise credit card interest rates without ‘reasonable cause'.
2) Classifications of delinquency status and the appropriate measures banks are allowed to take concerning these.
3) The applicable portions of credit card debt that will be affected by necessary rate hikes.
The first topic concerns restrictions on the conditions required before lending institutions are allowed to raise the credit card interest rates of existing card holders. As to the ‘reasonable standard', there tends to be significant debate on what that is.
The second topic deals with the criteria allowed for credit card lending institutions to dump card holders into the ‘default status at all and how severe the penalties are allowed to be. The government is leaning toward a more lenient 30-day additional period before card holders can be dumped into this status. The lending institutions are countering that this lengthy period would stifle their ability to react to detrimental risk situations they may face. They are opting for only a 5-day extended period. The Treasury Department sides with the banks and agrees that a shorter period is necessary. However, Congress so far, is taking a harder stance on this issue. The point being made here is that is is better to help these delinquent card holders to pay late than to drive them into despair and have them not pay at all.
The last topic applies to the rule of which portions of a card holder's credit card debt are allowed to incur the rate hikes. The government is leaning toward only allowing future debt to incur the rate hikes.
These new regulations are not going to arrive as a ‘slam dunk', but will be implemented over time. They are not intended to include limited charge cards and will not be enforced until some time in 2010.