Bye-Bye No Annual Fee
Cards: With credit companies forced to cut many
fees on low volume transactions (like paying by mail), they will
raise fees in areas that were previously funded from other sources.
For example, the days of no annual fee credit cards may be
numbered. Start expecting a minimum $100 charge every year for the
right to use a credit card. That’s if you can qualify for one,
given that card companies, like home loans from banks will only
approve credit cards for those with
FICO scores greater than 750. After all if they cannot charge
outrageous fees to delinquent payers then why give them a credit
card at all!
Bye-Bye Lavish Reward
Programs : In addition to paying annual fees, I’ll
probably also end up losing some of the credit reward program perks
that make credit cards attractive to many people. I charge about
80% of my personal and all work expenses to my credit card. This
gives me about 50,000 points a year on average, which has allowed
me to get free trips, merchandise and even cash back rewards. I
imagine these types off reward programs will be severely curtailed
as card companies cut costs. In fact, my free debit
card from the bank is starting to look more attractive at
the moment.
I’ll now be
Guaranteeing my Kids Debt in College: Okay, at
first I thought that banning credit cards for kids under 21 was a
great idea. Then I read the fine print – they can still get a
credit card if a parent co-signs! So not only will kids be unable
to build a credit history, but they may destroy mine if I co-sign
for a credit card they will be (mis)using. I would rather the
government focus on
educating college kids - and their parents - on the dangers of
credit card usage, rather than making parents co-sign for approval.
Kids have a great way of emotionally black-mailing their parents to
get stuff and they’ll soon figure out a way for getting them to
co-sign (like, I need it for emergencies). In the meantime, many
millions of parents will join their kids in the world of credit card debt at
graduation.
Higher Interest Rates
for all: The new legislation will prevent companies
from increasing interest rates on missed payments for at least 60
days (or first year of a new contract), but after the mandated time
frame expires, they can charge whatever "reasonable" rate
they want. So if you thought the current 15% APY were high on
overdue balances, you will be doubly shocked when credit card
companies start charging a reasonable (according to them) 30% plus
rate for over due balances. At this crazy rate your debt could
double every 3 to 5 years, even if you make the minimum
payments.
I’ll admit some of the provisions in the bill
are good (like longer statement cycles and no double cycle
billing), but credit companies are much smarter than the government
and I can assure they will find loop holes in the new laws to
continue making even more money. They’ll just add a
“government regulation service charge”, to deal
with the additional bureaucracy imposed on them. Despite being an
on-time, in-full bill payer and responsible credit card user, I am
going to get slugged along with those who were irresponsible with
their money, access to credit and had bad spending habits. So much
for doing the right thing.
My simple two step solution to
deal with credit card debt – Don’t get a credit card and cut out
habits that make you spend more!
Related:
~
I Want My Bailout Too and Here's
Why
~
5 Clear Signs your Job is in Danger (and 5 things
to do)
~
Funding the Bailouts by Printing Money and Issuing
Debt
~
Credit Card Reform via the 2009 Cardholders'
Bill of Rights
