Will 2010 Strangle the Credit Card Companies in US?
It would be absolutely imprecise or erroneous to mention that the US Economy is convalescing. Financial crises can clearly be witnessed and global customers are still cutting back. According to me, the beginning of new decade is a beginning of end in usage of plastic money. Fear of debt among credit card users, most of them already weather-beaten, along with the introduction of recent credit card legislation can cease the usage of plastic.
Okay, I’ll be clearer and explain in detail.
The New Credit Card Legislation
The introduction of new legislation is quite beneficial to the consumers, but extremely dreadful to the providers, diminishing their profit margin. Commencing from February 2010, this rule will enable consumers to repay the minimum balance of higher interest first, then the lower ones. The providers won’t be allowed to hike the interest rates unexpectedly (currently, a common practice) except under few circumstances, like after the promotional period ends, or late payment by the card holder. If they wish to hike the rates, in any case, they will be required to send a 45-day 
advance notification to the consumer/s.
The introduction of legislation erases the term ‘Universal Default’. From Feb 2010, there won’t be any hike in interest rates due to irregular payment of your utility bills. The providers will lose the ease and advantage of compounding new, higher interest rates with the transferred, lower rates. The providers cannot change your billing dates, and the due dates should be 21 days after the bills have been mailed or delivered.
Currently, you can exceed the credit limit of the card with an over limit fees. All the cards come with an excess to overdraft facility, by default. However, the providers won’t be able to take advantage of consumer’s negligence from Feb 2010 because the new legislation will introduce a law that will compel the providers to ask consumers to ‘opt-in’ for such facility.
Fear of Debt
There are several sever drawbacks and downsides of the current recession. However, it has essentially induced people to shrink their spending and start saving. The accumulated amount in their saving account lasts longer. This facilitates banks to provide business loans, and capital lending to corporations and government, which is quite healthy for the economy in long run. This saving habit is helping consumers to borrow less and repay more.
According to the figures declared by Federal Reserve, the revolving debt is decreasing considerably every month and emphasis on saving has augmented. Instead of indulging in substantial spending, this Christmas, people insisted on repaying their debts.
Death of Credit Card Providers
With the introduction of new legislation and saving habits of American population, the profit curve of credit card companies will witness a slump in the coming months. Although people can effortlessly own multiple credit cards today, they are not willing to. The fad of using cash to shop seems to be returning and will stay for a longer time. Is it an end of the Credit Card Era?
After such a big economy disaster the credit card companies still exist!
This is a good step taken by the credit card companies, this will result into less defaults as well.
This strategy is for only customers I reckon. Its beneficial for them but not to any credit card company.
End of this Era is going to be boom!
If the world starts dealing in cash, soon there will be no credit word and there won’t be any banks or companies closing down! Will be very helpful or the economy.
I am totally against the credit cards from first only. In my life till date I’ve never believed in credit! Today, i am so happy with my principles and also seeing the world how are they sinking in the world of loan!
Credit card companies were established to make profits out of the common people’s pocket and where they are standing today!
Sooner or later credit card companies are going to be charitable trust and companies. Now people have started thinking about each and every penny they spend.
The Tag line should be changed! Its already strangled now what more is left?
It is about time that these regulations were introduced. For far too long the credit card companies have been taking advantage of people and helping put many people in debt.
Unfortunately it is taking some time for these regulations to finally be put in place. So many credit card companies are rushing to jack up their rates in the meantime.