The Wall Street Journal posted some highlights of the credit card bill that just passed the Senate and is likely to pass the House.
Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent.
Payments: A consumer payment above the minimum applies first to the balance with the highest rate.
Teaser rates: Issuers cannot raise rates for the first year after an account opened. Promotional rates must last at least six months.
Bills: Issuers must send a bill 21 days before the due date.
Over limit: Issuers cannot charge over-limit fees on credit cards unless the consumer has signed up to allow such transactions.
Minors: For consumers under 21 years old, a company must get the signature of a parent or another to take responsibility for the debt, or it must obtain proof that the under-21 consumer can repay credit.
Disclosure: Cardholders must get 45 days notice of change in terms.
Fees: Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service.
Gift cards: All gift cards must have at least a five-year life.
Opinion: Yes, minors are targeted, but targeting them is not the major problem; I see very few 21-year olds in my office. The fees and disclosure thing is something the credit card companies will satisfy by sending out some pamphlet included with the statement with small print we all throw in the trash. The having a payment applied to the highest rate is a good step, but not enough; a $200 payment applied to a 22% balance will pay interest but not reduce the balance. In other words, will any of these “solutions” help people get out of debt and avoid banrkuptcy?
The benefits smack of window-dressing, while the more sinister stuff of credit card users with good credit get penalized will have them opt out and just use cash. And that will leave a system where only people with not-so-good credit participate resulting in systemic meltdown.
