New Credit Card Rules Evolve
Last December new credit card legislation was passed that will change the way the industry does business in the future, and many are encouraged, while some in Congress are pushing for even faster reform. According to a post by John Tozzi of BusinessWeek, the new federal credit card rule changes will not yet apply to small business credit cards, and will take effect in mid-2010. The changes will prohibit interest rate hikes on existing balances and application of payments to the portion of the balance carrying the lowest interest rate. And credit card companies will now have to give 45 days’ notice when changing terms instead of 15 days.
For those small business owners who use personal credit cards for their business needs, and many do, this is seen as a step in the right direction. Tozzi quoted the National Small Business Association as saying, “Although NSBA is disappointed that the rule will not go into effect until July 2010, it is gratifying that federal regulators recognize that small business owners need more than just increased disclosure, and are—for the first time—exercising their ‘unfairness’ authority to address a host of practices that defy free-market capitalism.”
The new credit card rules are being criticized by many for not taking effect for 18 months, and it could be that this is just a first step in credit card policy reform. According to Neil DeMause of CNNMoney, a Credit Cardholders’ Bill of Rights was introduced recently by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. This bill has many of the same provisions as the one passed in December, but would be enacted just 90 days after President Obama signed it, according to DeMause.
Credit card companies are expected to oppose such a bill, claiming the implementation period is too short and could have detrimental effects on the economy at a time when credit is already tight. The debate should be lively at a time when our whole financial system is in economic crisis and evolving rapidly.
