Archive for May, 2009


May 30, 2009



Last week both houses of Congress along with President Obama’s signature, created a new Credit Card Law.  The Democrats are trumping it as a victory over unfair banking practices that penalize people having financial difficulty.  That is how they want you to see this bill and that is pretty much how it was portrayed in the media.

But, if you take a closer look at this new Credit Card Law you might not be so pleased about its passage into law.  That is of course if your one of those Americans who pay bills on time, and do your best to avoid unnecessary interest charges and might even enjoy the benefit of the reward program credit card companies use to retain your business.  Well guess what?  Careful examination of this new law might make you wonder what kind of change we are talking about.

The banks have already announced needed changes to make up the shortfall in revenue due to the passage of this law.  One thing I did notice was not one word was mentioned about the 3-5 % the bank receives right up front on every purchase made with a credit card. Don’t be fooled into believing that money is to cover the administration of the card usage.  Here are a few of the new changes you can look forward to soon now that the law was passed:

     Annual Fees:  Remember paying those years ago until with competition most banks did away with them to maintain your business.  Well now banks will again begin charging an annual user fee to recover some of the revenue they are losing do to this new credit card law.

     Lost Grace Periods:  Some of you like me enjoy the convenience of using your credit card for purchases to avoid carrying cash or using your checkbook.  Banks are now saying they will charge interest on all purchases from the day of purchase.  So even if you do pay your bill at the end of the month you still pay interest.  Once again banks are saying this is to make up for the loss of revenue.

     Cutback in Reward Programs:  The banks are considering cutting back on their reward programs do to the loss of interest revenue and other fees they collected.  Many of us made a habit of using our credit cards to build up points that could be used for air travel, hotel stays and other purchases. 

Those who still take pride in being financially responsible are the ones being hurt by this new credit card law.  Keep in mind this law was passed by the Democrats and the purpose was to offer some protection to credit card holders burdened by high interest rates and late fees.  So in order for the government to provide protection for being irresponsible with credit, those who are responsible again suffer the consequences.   I don’t know about you, but it seems to me that with liberals now in power it seems like bad behavior continues to be rewarded at the expense of responsible behavior.  What is up with that?