Bitter sweet victory for consumers: The Credit CARD Act becomes law today

Today, consumers can celebrate a major victory: The Credit CARD Act becomes law, meaning increased consumer protection for credit cardholders. After a year of heightened consumer outrage against banks and legislative wrangling to craft a consumer-friendly bill, cardholders finally receive much needed relief and protection—the most sweeping in history.  However, the victory is more bitter than sweet. It is like winning the silver medal in an Olympic competition that you think you have won.

As evinced by credit card companies raising interest rates and changing terms to preempt the enactment of today’s new law, the victory will be short-lived.  In other words, consumers will end up paying more money through new fees and “legal” changes. If anything, this victory is one of principal more than one of net savings.     

Credit card predictions 2010

 

Recently, I received this great press release from Bill Hardekopf, CEO of LowCards.com and an expert on the credit card industry. It is right on the money. (Pun intended.) 

While some experts predict the beginning of credit card anarchy or Armageddon on Feb. 22 (when the entire Credit CARD Act is law), Mr. Hardekopf gives a realistic summation of what you can expect this year with solid examples. Below are his seven predictions.      

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The LowCards.com credit card prediction for 2010 is no surprise: cardholders will pay more for credit card loans. The cost of credit cards will continue to increase for consumers even though the major provisions of the CARD Act go into effect on  February 22. Cardholders could see increases in both their interest rates and existing fees, as well as the introduction of new credit card fees.

"Credit card issuers have lost billions of dollars in credit card loans during this economic downturn. Now they are staring at these new provisions of the CARD Act that will limit their ability to make revenue. They are coming up with ways to generate additional revenue and it obviously comes at the expense of the cardholder," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "This means that cardholders will continue to pay more for credit card loans. Cardholders who pay their balance in full every month may eventually see the end of 'free' credit card loans as we know them."

Here are some 2010 predictions for the credit card industry: 

1) More Cards with Annual Fees

According to the LowCards Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ) which tracks the rates and fees of 1000+ credit cards, only about 20% of the credit cards in the United States currently have an annual fee. But that number should increase in 2010. Some credit card issuers have already made the first moves to test annual fees on a small percentage of cardholders or offer cards with annual fees that build customer loyalty.