Today marks the 2 year anniversary for the CARD Act. Many are asking if it was worth it, is it meeting its purpose and was the Obama Administration right when it called this new law a turning act for all Americans. Some analysts insist it’s cost the collective American consumer billions of dollars. This week, we take a look at this historical document and how it’s changed the entire credit card industry.
Many may recall a few years ago the controversy behind what was then a bill that would significantly change the way credit card companies went out their business. The card companies were doing the math and making changes as they tried to predict what this bill, were it to become law, would do to their bottom lines. In fact, we saw credit card rates jump more than 2%. That jump would have equated to more than $16 billion that card holders would be paying.
Also, the bill was designed to ensure those with credit problems weren’t being overwhelmed as they attempted to improve their scores. As the details were being hammered out, though, it soon became clear that these consumers were taking the hit due to the card companies trying to cover any future anticipated losses. Those hits equated to almost 3.5%, even as their better-credit counterparts were only seeing increases of less than 1.5%.
Once the law went into effect, it became clear that there was a new proverbial sheriff in town. The new law had several requirements that were aimed at first, reducing consumer confusion and just as importantly, more fluid billing cycles with ample time to make payments. Credit card customers were given at least 21 days to make their credit card bills. This resulted in a drop of late payments by $474 million in just ten months.
Another problematic aspect for the card companies was the changes in how they were allowed to compute and then charge for over the limit fees. These days, consumers must opt into the program or see their purchase declined if it took them over their credit limits. The result was quite interesting. A vast number of credit card companies have eliminated over the limit fees. Before the bill, a full 95% of these companies had these fees in place.
Of course, it’s not been all bad news for the credit card issuers. Because they’d already raised interest rates prior to the new law taking effect, their customers were already paying more. While the card companies were frustrated with the new changes and the loss of potential revenue, their forethought helped offset some of the losses they anticipated. The problem, though, is the interest rate hikes were across the board – meaning all customers took a hit.
So now the question is: what kind of credit card offers are out there in current day? As it turns out, plenty – and each has its own impressive benefits and perks, courtesy of the 2009 CARD Act.
This bonus cash back credit card offer allows you earn $200 after making $500 in purchases during your first three months of owning the card. Also, earn 5% cash back on your first $1,500 spent on gas for your cars or on Amazon.com. With the way gas prices are shooting up, this is an impressive offer that comes at just the right time. That said, it’s for a limited time, so act soon.
Enjoy 1% cash back on all your purchases and an additional 10% cash back when you shop through the Chase online mall. There’s no annual fee and your rewards points never expire.
The One Card
Another great offer that’s withstood the various legal changes is the One rewards card. You’ll earn 1.25 dollars for every purchase, the chance to earn $100 in travel and no limits on the miles you earn. No annual fee, no foreign transaction fees and no expiration dates make this a truly versatile credit card offer.
So how has the 2009 CARD Act affected you and your family? Have you noticed a difference or is it business as usual? The one uncertainty in the new law is how it will fare going forward. Of course, politics plays a significant role and depending on what happens in November, there could be (though not likely) even more changes.