On February 22nd 2010 the bulk of consumer protections under the new Credit Card Act go into effect.
But do they really protect you?
Whether you're one of the millions of Americans swimming in credit card debt, or you're like Shawn and Jane Forbes, who say they pay off their card balance every month, the Credit Card Act will affect you.
Forbes worries, for him it's for the worse.
"We're, in effect, subsidized by the people who carry balances and pay the interest rates because we don't, so for Citi or Bank of America or anyone to ask us to pay a fee would not surprise me," said Forbes.
He’s concerned there will be more back-lash to the Credit Card Act like what we saw last fall when a few banks started charging fees to some card holders who pay off their balance in full.
But for people who don't, the law is helpful in these ways.
- It limits interest rate hikes
- Restricts universal default -- or the practice of raising rates based on unrelated credit
- Gives card holders the right to opt out if the terms are changed
- And mandates clearer due dates and times
Andrew Green a Finance Professor at Wofford College says those are positive steps.
He cautions the law has no cap on how high interest rates can go, and there could be a negative side effect.
"I suspect over the next year or two we will see more creative ways from the credit card companies trying to recover some of the fees and interest income that they're going to lose now," said Green.
Professor Green says the population that might be helped most by this legislation are students. 84% of them carry credit cards according to a resent Sallie Mae study. 69% have balances. This new law will require them to get parental permission to sign up for credit cards, or proof of income."
"It probably is a good thing, because I know a lot of people do overdraw a lot more when they're this age, then when they have a real job," said Lindsey Huston, a Wofford Student.
Another Wofford student, Meg Lindsay disagrees.
"If someone wants a credit card they should be able to get one," said Lindsay.
…Mixed reaction to a law that in many ways polices both the industry and the consumer, in an effort to get more Americans out of debt.
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