January 05, 2009
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News: CC Industry's Next Moves.
With all the hammering that the credit card industry is getting from the government from the new ‘consumer-friendly' regulations, one might expect the industry to draw the battle lines. But that doesn't seem to be happening. Perhaps because of even greater threats they face, they've decided to take ‘soft measures'. There's still some time before these new regulations will go into force (July 1, 2010) and, in the mean time, the industry is taking strides to work more closely with the plight of those consumers who are faced with going into default on credit card loans. They're beginning to work on an individual basis with their most-risky clients in hopes of collecting what ever they can on credit card debt while avoiding driving anyone into bankruptcy.
Back in early November, spokespeople for the credit card industry appealed to the US Treasury Department for financial assistance in relieving the worst-case consumers of much of their principle credit card debt (taking between 20 to 70% of the total debt right off the top). They requested government assistance in some of the funding. The rub was pertaining to tax-deferment, however, and the industry was flatly denied by the government. So the industry is still going ahead with their strategy of forgiving large amounts of debt (that probably won't be collected anyway) and extending payment terms out as far as five years.
On the ‘PR' side of things, the credit card industry seems to be moving into early compliance with many of the new regulations. Issues like ‘tricking consumers into schemes' and careless interest rate hikes made just to improve the bottom line on balance sheets are being phased out. Larger players in the industry are becoming more sensitive to fairness toward the consumer. These are things the lenders can afford to give up.