SUN EDITORIAL:

Helping consumers

New rules regulating credit cards should be implemented now to ease families’ debt

Thursday, Jan. 1, 2009 | 2:06 a.m.

Credit card companies are entitled to a fair rate of return, but under the current rules they get that and more. For decades credit card companies have held undue power over consumers.

Payments late by even a day can be subject to excessive penalties and can trigger higher interest rates. The credit card companies have justified such behavior by saying they take a risk in offering credit to people. However, what they’ve really done is fattened their bottom lines and entrapped consumers with excessive debt.

But last week federal regulators moved to curb credit card companies from charging exorbitant fees and interest rates to consumers. Now, the practice of jacking up the interest rate on a current balance will be forbidden. In addition, a number of other techniques companies have used to hike rates and fees — and consumer debt — will be outlawed.

The changes will also give consumers better and clearer information about their cards, and companies will be required to give consumers more time before changing terms of the cards.

Unfortunately, the rules won’t take effect until July 2010, which will do little to help consumers ensnared by debt in a terrible economy. The delay appears to be aimed at giving credit card companies a grace period, something they are loath to extend to consumers, before their bottom lines are affected. One study suggests the new rules will save consumers — and cost the 16,000 companies that issue credit cards — $10 billion a year in interest.

We believe that regulators should have made the rules take effect immediately, and instead of fighting the changes, credit card companies should welcome them. Credit card defaults are on the rise, and neither the country nor the credit card companies would benefit from another meltdown in the economy.

Discussion: 3 comments so far…

By Future2012

1/1/09 at 12:53 p.m.

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The LV Sun is complaining about the slow legally binding process to put regulations in place.

We have been in a recession since December 2007, and with Bush a lame duck what has the Democratic Congress done.

Nothing.

Over one million people lost jobs in the last two months of 2008.

No law for Regulation changes have been passed.

Harry Reid, Chris Dodd, Nancy Pelosi, and Barney Franks as the Congressional leadership failed to pass any relief to the high gas price, including domestic production.

The Harry Reid, Chris Dodd, Nancy Pelosi, and Barney Franks Congressional leadership "stimulus" package in June of 2008 did not work. They did not understand that the people have realized that just like the banks that they personally must deleverage. Hence government "checks" went to pay off debts. It did not counter the $700 billion foreign oil cost.

Over the objections of millions of concerned taxpayers, Harry Reid, Chris Dodd, Nancy Pelosi, and Barney Franks as the Congressional leadership passed the September 2008, $700 billion TARP law with no compliance teeth or controls.

Harry Reid, Chris Dodd, Nancy Pelosi, and Barney Franks as the Congressional leadership failed to pass an auto industry rescue package.

Harry Reid, Chris Dodd, Nancy Pelosi, and Barney Franks as the Congressional leadership and President-elect Barack Obama have decided that we can wait until 2009 before we need the trillion dollars "stimulate" package.

Barack Obama has been running for the last year on how bad the depression economy was and that it could be fixed by him PDQ

They had all left Washington.

Democrats and Obama like Nero Claudius Caesar Augustus Germanicus are fiddling while America is burning. Having run on the basis that he could solve the confidence crisis, he has gone silent.

When Congress rushes back Jan 6 for the "stimulus" package will we find out that it will cost us $250,000.00 for each of the 3 million jobs that Obama wants to create?
By PacificGatePost

1/1/09 at 9:16 p.m.

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The changes on credit card legislation will have absolutely no real impact on consumers and their use of credit cards.

JUST LISTEN TO BERNANKE "
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http://pacificgatepost.blogspot.com/2008...
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Issuers will continue to be abusive of all card holders.
By KillerB

1/2/09 at 7:31 a.m.

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Let's start with the little known fact the credit card companies, MBNA being the most prominent, financed the Republicans' rise to power in the late 90s. They virtually dictated the new bankruptcy law Bush signed in October '05. That new law virtually ended liquidation. That's what's hurting so many of us now.

Another dirty little secret -- credit cards issued by national banks are literally a house of cards due to the fact those banks are issuing them, and reaping about $35 billion a year in profits, illegally -- putting those big vampires due for a huge and much-deserved fall.

Makes one wonder if ANYBODY in charge of those big finance institutions are in touch with reality. At least the same reality the rest of us have to deal with on a daily basis.