Recently, the congress passed a misguided credit card law, the Credit Card Accountability Responsibility and Disclosure Act of 2009, which makes you pay more on every credit card bill, even if your credit is good, or your credit card balance is low.
You may end up paying an annual fee, losing your percentage rebates, your cash back, or your rewards program.
The new law puts a limit to the credit card companies’ ability to increase rates on credit card balances, even if a cardholder’s balance has been rapidly increasing.
A rising balance increases the risk that the credit card company won’t get paid as many credit cardholders have run up big balances in recent years, and then failed to pay them off. Thus banks increase interest rates when balances get big, but the new law stops them to do this.
But in order to protect themselves, some credit card companies have started to charge annual fee on their credit cards, on every credit card bill. This has been done in response to the new law, so that lenders can defend themselves against potential losses.
Those lenders who don’t charge annual fee will most likely drop their rewards programs, or stop giving customers’ percentage rebates on credit card purchases, to save money so that they don’t have any loss.
Although the new law is meant to protect cardholders, But in reality, it is causing harm to cardholders who had good balances and credit debt.
It is quite obvious that if you make it harder for credit card companies to charge higher interest rates to risky people as compared to responsible people, they’ll increase rates for everyone, or make it harder for people to get credit cards in the first place.
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