Lisa Simpson
Feb 25,2010
In: Finance

Relief from Credit Card Arrives but with New Dangers

Relief from credit card arrives but with New dangers.

It may be news to many who have not heard of it as yet, big changes are about to debut in the credit card industry. Last Monday the Credit Card act has become activated and it is hoped that the consumers will get some kind of relief from nuisances like “double-cycle billing” and whimsical rate increases

Last May the new act had been inked into law. It assures consumers of more clarity and transparency in credit card bills. But the holders should continue to be wary for a whole new set or traps.

Perhaps the consumers could soon be overwhelmed with a string of new fees and other charges. The financial entities like the banks have already been aggressive about introducing new fees or increasing old ones to compensate for losses incurred due to the Card Act.

In May 2009 Discover Financial Services declared that it would be levying 2% fee on all purchases made outside America.

Once the standard charge was 3% for transferring one card to another but JPMorgan Chase has now hiked that to 5%.

The new law has not set any strictures on the kinds of fees the card issuers can enforce. Thus consumers should meticulously scrutinize the section of the agreement dealing with terms and conditions so that they are aware of their precise standing. The CEO of LowCards.com Bill Hardekopf said, “Fees are the one source of revenue that will become more and more important.”

While the Congress moved forward to tighten the credit card group, the banking industry warned that disturbing the status quo would make it more difficult for consumers to avail of this facility. Till now their predictions seem to be coming true. The credit amount that consumers could avail of through credit card firms tumbled by $252 billion calculating to 7% from 2009 March to September – as per the findings of IRA Bank Monitor.

Credit is going to become even tighter. According to the Card Act the firms would be strictly controlled as regards their marketing cards to college goers. This means an important part of their dealings would severely contract.

Card issuers will now probably observe strict rules by demanding income proof and savings details. As a result those with poor ratings would not be able to get credit cards when the law becomes enforceable from 22nd February. Joseph Ridout of Consumer Action said, “I think it is fair to assume that credit card companies are going to scrutinize their potential customers a lot more closely than they did in the past.”