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New Credit Card Reforms for 2009

After years of unfair advantages over their consumers, banks have finally had to take a step back.  In May of this year, the Federal Reserve Board made it their priority to take the reigns on issues that have concerned credit card users for years.  In a hearing conducted in the capital, bank representatives and the opposing side got together to discuss a number of pending issues.  Is it unfair to raise a credit card interest rate based on the late payment of another unrelated credit card? Is it unfair to increase the interest rates to 20-30% on previous unrelated purchases?  Is distributing lower interest charges to lower rate balances instead of higher rate balances a fair deal?  These are some of the issues tackled by the Federal Reserve Board. 

To say the least, banks and credit unions are not happy.  They make a simple argument; if consumers are not satisfied with their policies then they can easily switch banks.  In reality, every time you close a bank account and open a new one it hurts your credit and in turn, increases your interest rates.  While they claim that their imposed rates and charges are necessary to keep business afloat, it has become obvious to consumers and legislation that these charges go far beyond necessity.

One of the things discussed at the hearing was how the “fixed” interest rate increased when consumers used their credit card near the limit.  For example, if a credit card had a $2000 limit and a consumer used up to $1900, they were immediately depicted as a risk and their APR was increased from 15% to 25%.  The Board argued that this was misleading and if banks could so easily impose changes on any consumer’s status, what was the point of instating credit card limits and fixed APRs? 

Another issue that was tackled at the hearing was that of double cycling.  When credit card users carry a balance onto their next billing cycle (as most do) and their APR is increased, the new rate is imposed not only on their new billing cycle, but it also affects the remaining balance of their old billing cycle.  The Board argued that any APR increase on a new cycle should not affect old billing cycles.  They are two separate issues and should be treated as such.  Furthermore, interest rates should not be increased on one credit card account when a cardholder fails to make payments on another unrelated account or bill.

Giving consumers a reasonable amount of notice regarding any changes on their credit card account seemed to be a big issue at the hearing. The Board suggested a 21 day notice between mailing their new interest rate statement and the new payment due date.  This would give consumers enough time to receive the news and deal with any unfair or inaccurate information.  Also, the Board found it necessary for banks and credit unions not to charge a fee when a consumer was paying an overdraft on a checking account, debit card purchase or ATM withdrawal unless they gave consumers the right to choose not to use overdraft services.

The new laws discussed at the hearing were all prepared to benefit the consumer.  Legislation hopes that these new reforms can help consumers better manage their money by giving them alternatives and more space to make mistakes.  However, there are always fears that it is never enough and that credit card companies and banks will find a way around the new propositions by installing new laws and providing more misleading information to their consumers.

About the Author

Jackie B writes for MyCreditSearchSite where she reviews Payday Loans and Credit Offers

What are interesting educational word or english games that are not board or card games?

Games help students learn but board games and card games are not allowed in our work place. What games don't require a board aside from contests, tic, tac toe, etc.?

One of my favorite, most successful educational games is "(English) Baseball". It can be adapted to most any subject. It is played along the rules of regular baseball, two teams, etc. It is a good review, practice or culminating activity.

The teacher can be the pitcher for both teams by asking questions. It is best [for individual differences and to make the game more interesting] to have a set of prepared questions developed from your lessons from easy (1 base) to difficult (home run) questions. Filling in blank or multiple choice is usually easier than giving a three-part answer. You can even have your students create the Q/A.

It takes some time to play, but you can play 1 inning a day, for example. Remember to set a time limit (15 sec) to answer: use a student timer and score keeper. Students enjoy being able to actually move around the room from "base" to "base" .

Credit Card Fee Sparks Debate
Glenbrook High School Dist. 225 administrators imposed a $2.50 credit card user fee for online and in-person transactions in the district at the start of the spring semester last month and did it without notifying the school board as required.

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