Sunday, November 15, 2009
Banks Intend to Buckle Down in the Face of Credit Card Legislation
Posted by: Lisa Matthys
Written by: Garrett W. McIntyre
In the FED’s most recent bank survey they asked how the banks indented to deal with the Credit CARD Act of 2009. The Act meant to protect users from sudden interest rate spikes on their credit cards. Its main provisions limit when lenders can raise rates on existing balances and also require lenders to alert card holders of increases.
Of the banks surveyed, 75% of respondents did not expect to be in compliance with the legislation until February 2010 when most of the Act takes effect. Banks reported that they intended to, or already have, tighten the terms of credit card loans to both prime and nonprime borrowers. About half of the respondents indicated that they would increase interest rates and reduce credit limits for prime borrowers. A bit less than half intend to raise the minimum credit score required to obtain a loan. 75% of respondents indicated that they would raise rates on nonprime borrowers.
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