Wednesday, September 30, 2009

Taking a Swipe at Credit Cards

By Jorden Meltz

Feeling the heat from both consumers and potential new regulations, credit card companies have begun to make changes in their policies and transaction fees. Legislation will soon be drafted on creating a Consumer Financial Protection Agency which will have the ability to set rules governing credit cards, mortgages, and other financial products. In accordance with this and President Obama’s recent action towards regulating financial services, banks and credit issuers have had two very different reactions. The first set of reactions, whether they are a good gesture by the banks or just the banks trying to implement new regulations before they are forced too, are those that are consumer friendly. The second set is the attempt by banks and credit companies to try and either get as much money as they can before new legislation is passed or the recession forcing them to take drastic measures. Some of these not so consumer friendly actions taken by banks and credit card companies have included interest rate increases without cause, card cancellations, increasing minimum payments, and increases in fees. On the opposite side, some banks have begun to offer checking accounts that aim to limit overdraft fees and issue credit cards that allow consumers to pay off certain monthly expenses without incurring finance charges. The next few months will be very interesting for both banks and credit card companies as some will continue to find ways to squeeze as much money out of consumers as possible before they must abide by new regulations and others will start on a path towards more consumer conscience business principles. In an industry based on interest charges and fees, it seems banks and credit card companies might be the ones finally paying late fees, as it seems long overdue regulations are finally beginning to be put in place.

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