March 6th, 2010 | 
Author: The new credit card law was supposed to guard customers from unfair credit card rate hikes and fees. But lots of professionals and consumer advocates are still seeking for more protective measures for consumers and say that the new law is insufficient or might even cause more difficulties to individuals who are already credit card holders or seeking to get credit cards.
At present, ”risky” borrowers gets the most burden because of the high interest rates and fees being slapped on them. A number of of the reasons lenders give is that customers belonging to the “risk” range are the ones who are prone to default on their loans at an earlier stage and raising fees and interest rates are ways to collect revenue from these kinds of customers just in case failure to pay happen. Several restrictions against this type of practice are also included in the new law but there are also some new, yet not so new regulations which banks can “modify” to their advantage.
Ten years ago, annual fees on credit cards were removed but it’s now making its way back to people’s credit card statements. Even if a considerable percentage of lenders in the US have added annual fees to their borrowers bills even before the new law took effect, all credit card holders will now have to deal with annual fees.
Ways to create added revenue were also created by some credit companies. Inactivity fee is one which can amount up to $20 usually given to those who had stopped using their credit card for half a year. Another one is known as processing fee where $1 gets charged to new customers who apply for credit cards and it’s for the processing of paper statement.
Existing fees were also raised and one of them is the balance transfer fee. From 3 percent to 5 percent, one particular financial institution, JPMorgan Chase, will now charge customers who opt to do balance transfers to another provider in an effort to lower their credit card debt. Customers who want to do balance transfers have no choice but to pay since balance transfers can only be done by their current credit card provider.
Acquiring new cards will now have a 13.6 percent interest rate compared to last year’s 10.7 percent. The increase in base rates is also expected to rise later on and this would allow lenders to raise variable interest rates.
Credit card holders may also have a hard time to obtain and maintain their credit cards. Nowadays, lenders granting credit cards has become more stricter and are doing all sorts of measure to reduce risks. Since the financial crisis, not only did banks tighten the way they grant credit, but they also devised plenty of schemes to get more revenue from their credit cards.
Millions of people have also experienced cuts on their credit limits. An estimated available credit amounting to $1 trillion is said to have been eliminated by doing this. California and Florida are two states that were the most subjected to credit limit cuts because of the mortgage crisis and high unemployment rate.
People should also not be surprised if they are not receiving credit card solicitation in their mail anymore. Compared to year 2000 up to 2008 which had an average of 2.3 billion solicitations, only a quarter of this figure have been recorded in 2009.
The new law has provided a few restrictions too and getting around these restrictions will be the strategy for lots of lenders. This is an additional factor why banks will be more reluctant to issue credit cards especially to those who have low credit ratings and low FICO scores. Individuals who have good credit records and have other business with banks are the more targeted market for granting credit cards.
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