Lowered limits. Higher rates. Harsh late fees.
If you’ve been squeezed by the credit card crackdown, new rules should help make sure you’re not punished again. You can say goodbye to surprise rate hikes, you’ll have more time to pay your balance and you won’t have to shell out more for all your cards if you miss a payment on just one. But these changes will not take effect until July 2010, and since our banks are in freefall, they will do everything they can in the meantime to make you pay more.
Unfortunately, these practices will likely continue and even accelerate into the July 2010 rule changes as credit card issuers move to get all the high-risk, low-profit cardholders off their books as they can. And it’s not just hurting consumers. Michael Michalowicz, founder of Obsidian Launch, calls it a “punishing blow” to small businesses, who are already hanging on by a thread in the economy. The vendors are also getting hit, according to attorney Jeff Sonn, because they are seeing more charge-backs and challenged transactions. The commercial side is feeling it as well, probably more than anyone, says Peebles Corp. founder Don Peebles. Developers are having their loans called even if they’ve been on time and never defaulted. It’s all part of a solvency issue on the part of banks who are desperate to get paid back and hoard capital to ride out the downturn.
Gail Hillebrand, financial services campaign manager for Consumers Union, explains in detail the protections that will go in place in 2010:
Consumers will have 21 days to pay their bill before it is considered late.
Some of their payments will go to high-interest balances if there are any, not just the zero balance.