The Main Effects of the New Law to Credit Card Companies

Under the new law, the credit card company is required to give you 45 days written notice before raising the interest rate on exist card and list out the amount of time it would take a customer to pay off his balance for every bill. The statement will show you the ugly truth of the gimmicks that card companies have used to drive up profits.


The credit Card Act of Accountability, Responsibility and Disclosure of 2009 aimed at protecting consumers from sudden interest rate hikes, excessive fees and other moneymaking gimmicks may be only favor the wealthy. These regulations are leading all issuers like American Express Co. to the top of the credit food chain. The will race to use reward points to keep customers with top credit scores, while the excessive competition is never a good thing in any industry.


The average credit score of cardholders for American Express is 754, which is 32 points above the other counterparts. The borrowers with top credit scores, for example, Walt Serafin, who is the Biotechnology company manager and a cardholder of AmEx, used reward points from his top scores credit card paired with a holiday discount and purchase an Apple iPhone. While the borrowers with low credit scores were aimed at making up for lost revenue because of the new law. They may encounter new membership fees, difficulties applying for credit.


The Credit CARD Act also caused the issuers tight their lending standards, while a large numbers of card companies have already relaxed lending restrictions and a lot of customers get high consumer loans in the fourth quarter. While in the same period, many cardholders focus on trying to pay off their debt and the revolving consumer credit has been falling every month, it reached a low point and fall by 9.6%, 2009,showed by the Fed report.