What the CARD Act of 2009 Means for Consumers

The U.S. Senate overwhelmingly passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 earlier this week. The House, which already passed its own version of the bill last month, also voted 361 to 64 to wrap up the legislation. Now the bill is sent to the President for his signature to become a law, which could happen before the Memorial Day weekend.

The CARD Act aims to protect consumers by preventing card issuers from hiking interest rates whenever they feel like to, charging fees that don’t make any sense, and allowing cardholders enough time to pay their bills every month. This video from New York Times explains quite well what the new credit bill means to consumers.

If you ask me whether I think this bill is a good idea or not, then my answer is yes, it is.

However, I don’t see I can benefit much from this legislation personally because I have been following the simple rule in using credit cards since the first day I got my first card: Pay my bill in full on time every month. With this rule, I have never got into trouble with credit cards and enjoy a very good credit score. Credit card interest rate, which is the center piece of the new legislation, is never an issue to me, whether it’s 5% or 50%, because I haven’t paid a penny in credit card interests.

When using credit cards, what really bothers is credit card rewards program being downgraded, which unfortunately could be one of the consequences of the new CARD Act. Since now credit card issuers can no longer charge those fees (over the limit fee, pay bill over the phone fee, etc) they used to charge, they will have to find other legal ways to make up the shortfall in revenue, including adding annual fees to cards and canceling card rewards programs.

If this indeed turns out to be the case, then I am afraid I don’t get any protection from the new rules. Instead, I become a victim of it .

Comments

[captainccs:]

As you say, this bill protects the stupid card user and hurts the smart card user. I too pay the card in full every month and since I now use electronic transfer to do so I even save the cost of the First Class stamp and the occasional late payment fee when the check gets lost in the mail.

Legislators NEVER think of the unexpected consequences of their actions which, in this case, hurt the smart credit card user.

May 21 09:48 AM

[VictorHAustin:]

The Gramm-Leach-Bliley "Privacy" Act was a sham that was just a huge amount of bureaucracy, and a government-mandated unreadable "disclosure" all designed to completely bury from view a huge safe harbor for banks and merchants to sell names. All they have to do is cite a "joint marketing" agreement. If you don't believe me, sit down and actually read one of the disclosures. They are all almost identical.

Pardon me if I am deeply suspicious that this latest legislation got derailed by young staffers who were buffaloed by the industry. I strongly suspect it has regs buried in the back pages that are mainly designed to help the credit card issuers reduce losses for their lax and wild credit extensions to dogs, dead people, and er, uh, "subprime" borrowers.

May 21 09:58 AM

[easyrider13:]

some of you guys have obviously had the good life and have not experienced lower paying jobs, layoffs etc that may crunch at least your short term ability to pay. I also have a good credit score my friends but have seen times when i could not possibly pay some bill when due, or made an honest mistake and somehow let the date slip past. Condemn us if you want, but I consider myself cautious and with some intelligence (however not perfect like you. ) Some co.panies (not credit card companies) add 10% to the bill if it is a day late). I also think these companies should be regulated.
Lastly I am sorry "The Sun" that you may lose your little side benefits for being a "good" boy, but I think somehow you may survive. Get over it. This legislation is 100% positive. Thanks again Obama. I have been frustrated all my credit card liofe by these "capitalist pigs".

May 21 01:58 PM

[FDNY RET:]

Again everyone overlooks the obvious:
The carefree, irresponsible Grasshopper--IS Their Constituency!!.
Only the Fool borrows beyond his means to repay!!.
Only the Fool's leaders believe the cure to over borrowing is More borrowing, so therefore they can't simply have massive cancellations of delinquent Credit Cards which is the "secret formula" to responsible borrowing habits!!.

The old "for every action there is an equal and opposite reaction" is also conveniently overlooked.

If the Banks require X+p+r+o+f+t= to be profitable, and you take away r,o,&f they'll either add r,o,&f to someone else to make it up or simply divest themselves of a loosing segment of their total business.

Either way r,o,&f come out of the working/productive segment of the economy & go to Fools bonuses.---Or--That wonderful massive, spend every last nickle I can Beg-Borrow and Steal segment of the Population that Govt. is counting on for propping up this house of cards is--GONE!!

Either way: It's a giant leap down the road to Govt. control and Socialism----Which may well be the underlying intent!!.

May 21 02:20 PM

[John100:]

It's only natural that the credit card bill gets passed (obviously, it's not quite signed into law yet). After all, which representative is going to say no? His/her opponent will have a field day in the next election when the time comes.

Of course, it is only expected that banks are taking issues with this. There is no reason for them to go quietly. People use their credit cards and it will be difficult for anyone to abandon their cards just because they take a different stance.

I actually love using credit cards to accrue cash back and it's easier to track expenses. Something that cannot be easily done or as well done with a debit card or cash. I simply pay it off every month.

I also pay off the entire balance every month to avoid any fees whatsoever and absolutely refuse to carry any balance. There is just no point in doing so. If I cannot pay it off in full, then I wouldn't spend the money at first place.

Online websites for research and finding good deals is another way I stretch my dollars farther. For example, I recently came across an interesting table that details the discounts on Amazon at:
www.uberi.com

I imagine other people will find it useful too.

May 21 02:42 PM