Big changes in store for U.S. credit cardholders

Banks, which oppose the legislation, will need to make up the cost somewhere, and cardholders who pay off their balance in full each month could see new annual fees and lucrative rewards programs canceled.

Heh, so part of this wonderful deal is that responsible card-holders get punished for being responsible. Yeah, that seems logical...not!

I prefer the way it is done in Japan, where you use your card as a charge card and then the entire amount you charge during the month gets deducted from your bank account once a month.

Credit cards are a cash-cow for banks. Stopping abusive practices will not automatically result in them cancelling programs such as rewards programs. If the reward program is a popular one it will be bringing in a lot of revenue for the issuer. If it is not popular, yes it might be cancelled as there are costs to carry every program that need to be covered.

Big changes in store for U.S. credit cardholders

The Nanny State, deeper and deeper into your pockets.

"This cements a victory for every American consumer who has ever suffered at the hands of the credit card industry,” said Sen Christopher Dodd, D-Conn, chairman of the Banking Committee."

Simply hilarious, coming from Chris "Countrywide" Dodd, now looking at almost sure defeat in his next reelection bid. People are at last on to this fraud.

I prefer the way it is done in Japan, where you use your card as a charge card and then the entire amount you charge during the month gets deducted from your bank account once a month.

That is one method for doing it. However, banks in Japan are now trying to push the revolving credit plans ("ribo-barai") where you only have to pay a minimum amount and carry the balance (plus interest) forward like "normal" credit cards.

This is NOT the same as having the store split the price of purchase into multiple payment plans ("1-kai barai, 2-kai barai" etc.) That charges a small 1 time fee and then you pay it off in installments.

Japan banks are coming around to the fact that "ribo-barai" would be a HUGE cash cow and that consumers aren't clued into how it works just yet.

Under the bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance

This is a relief. I know if I miss the payment on my card by more than a few days my rate doubles. I have it set up on auto-pay but I was always wondering if some kind of glitch in the system would suddenly cause me to see my rates spike even tho I didn't even have a hand in it.

Banks, which oppose the legislation, will need to make up the cost >somewhere,

How about making it up from the near loan shark level profits? How much higher is the average interst rate on a credit card over ANYHING on which interest is calculated? The term USURY comes to mind.

If I read this right, it boils down to taking money from responsible credit card users in order to help irresponsible credit card users.

Is this the promise to "spread the wealth" that we heard of before?

Responsible credit card users...hahaha!

screw the banks, use cash...if you can't afford it, don't buy it

stirfry,

screw the banks, use cash...if you can't afford it, don't buy it

While I agree with the sentiment, there are a couple of situation where your words do not apply. 1) Some people use credit cards like a debit card paying off the full amount each month. The advantage is that you can get a better credit rating. 2) You have money in the bank, but you didn't bring it with you, yet you have a credit card.

Again, although this story does not personally concern me, I don't see how it is fair to penalize responsible users. This is especially true when the US should be encouraging consumer spending. In addition, I really hope Japanese banks don't consider following this awful example.

kinniku what has credit rating to do with anything? one should not live above their income, i do not understand need for creditcards in Japan anyway because there are ATM'S everywhere

Dennis,

A good credit rating in the US will usually help you get better rates on mortgages and other loans.

The Republicans have this credit card 'nightmare' sorted -

"It's Government intervention."

"It's Government interventionnnnnn!"

"Socialissssssssmmmmmmm!" (screams, thumps table repeatedly before collapsing).

:-)

USURY should be outlawed. Japan is fine only because they do not have these credit cards and the, what, 2.5 trillion USD debt that the US consumers have. The Banks receive money from the Taxpayer and then squeeze them with increasing interest rates on credit cards, even on people who pay their debts on time because the banks need money and can raise the interest rate to whatever they darn please (in contract).

I am thankful to Obama and Team for trying to stop these abuses. Should have been from today and limits set on interest rates above prime (which should reflect inflation).

If I read this right, it boils down to taking money from responsible credit card users in order to help irresponsible credit card users." IN a lot of ways, it is. This, on top of banks being able to dump their bad assets and get a much better return by the gov (have any of you seen some of the property that is foreclosed, and not being maintained?).

I am a little p'ed. I have never, ever, had a problem with my credit card. I think they should go back to more stricter rules in obtaining one. far too many people use them as income.

Dennis,

In addition to what Stanley50 said about mortgages and other loans (obviously most people cannot or will not pay cash for housing loans etc), depending on where you are and the bank you use, ATMs in Japan are not always open and available and if you use an ATM other than your own, you will usually pay a rather hefty fee. If you look again, I am and was explaining that if people pay the full amount (or have it withdrawn automatically from the bank) each month there aren't any fees. So, what I wrote has nothing to do with 'living above your income'.

skip,

I think they should go back to more stricter rules in obtaining one. far too many people use them as income.

Yes, this is a main problem and it is unfair for responsible people to bear the burden.

Oh man....get ready for the rush on Nigerian credit cards!

If I read this right, it boils down to taking money from responsible credit card users in order to help irresponsible credit card users.

Leave it to conservatives to read things wrong and end up defending highway robbery, aka usury.

We know it is very difficult for conservatives to understand, but if it means paying an annual fee of $15 to ensure that my neighbors are not getting gouged by credit card companies, I'll pay the fee. Maybe banks can make up some of the difference by not paying their executives so much, or by coming up with other ways of being competitive.

Moreover, when banks can't gouge "irresponsible credit card users," then they will refuse to give them a credit card, or keep the credit limits very low -- the way it oughta be.

Most rewards programs are junk --> about a penny per a dollar. The ones that give money back on fuel can be fairly good though. Some business credit offers can be fairly generous. If you buy something on a credit card you are generally protected on the purchase.

People are already being gouged by the credit card companies. =This is considered short-term debt and they can raise the rate every 30 days to the maximum amount if they want -doesn't matter if you default (late payment etc) or not.

Financial institutions need money right now and for every dollar they offer you in credit they must hold some money aside = expect companies to cut your credit amount offered. Some companies are even giving out bonuses to pay off your debt.

Bottom line: Credit cards are short-term loans generally expected to be paid off in 30 days. =This is not a long-term debt solution.

"sudden hikes in interest rates"

This affects only people who buy stuff the can't afford. I'm not one of 'em.

"Responsible credit card users... hahaha!"

Don't laugh - I'm one of 'em! I always pay for whatever I've bought with my credit card before the end of the following month - therefore I pay zero interest.

Anytime you pay with money you are paying interest = you just don't know it and whose interest it is.

With barter you are really better off. Even swap, no taxes, no inflation.

That bill in your pocket is more of a lease than ownership =usually has "property of" somebody written on it.

I remember I saw something on CNN saying that the total credit card debit in US is more or less $20,000 per person. Americans do spend more than they earn, not everybody of course. So, in the end of the day, this new regulation will do well. I think people will start using debit cards more. I already do.

Tip: if you need Atm money -use your Atm card a a debit card (buy something) and ask for extra cash -this can save you a ton on fees.

Leave to the usual winger suspect to protect the banks that have helped to nearly put the US economy into depression. We are all paying for their mistakes by pumping billions of tax dollars into the zombie banks. Yet the wingers cry boohoo for the banks now. How predictable.

The banks are getting zero interest loans from us and then charging some of us 38% interest on credit purchases. The banks did not care a few years ago who got credit cards, homeless people could get a visa just like they could get $500,000 in a mortgage loans. Now they are bankrupt and begging for money from the US government. Any yet the wingers apologize for these failed businesses.

For those of you that do not want to pay annual fees for cards, then do not use them. Who cares what your credit rating is when home prices are tanking in the country, again thanks to the banks sub-prime pyramid scheme to defraud their investors and eventually all of us. Rent for the next five years.

While it is one thing for people who don't carry a balance to have to pay fees to support the profits of the banks it is quite another for the banks to rig the system so that people who do start to carry a balance can never clear the balance. If you were to pay the "minimum" payment on your balance the debt just grows and grows. When you hit your credit limit a fee gets tagged on that puts you over. Now your interest rate skyrockets and you are paying fees that the yakuza charge. Because that's what credit cards are - legalized loan sharking.

The serious point of the article is that Americans are addicted to debt. It's the only way the lifestyle was maintained as manufacturing jobs moved out of the country. Now the bubble has burst. The world economy is going to have to get used to the idea that the Americans can't buy everything in sight. So are the Americans.

The unfortunate thing is that, as a business traveler, I have to have credit cards. Sucks, doesn't it?

Even as a renter you are not safe. These commercial mortage loans that many rents are based on are typically 5-7yrs. When the loan is over they must reapply for another -money is very tight in that area also. At a minmum your rent may go up, at a max they could not get a loan and forclosure happens and you must find somewhere else to live.

People did not trust these financial institutions and pulled their money out. Banks, credit card companies are looking for cash anyway they can get it.