Credit card regulation only partially effective thanks to loopholes and lag time

Congress recently passed what one expert called a “Set of discrete new laws” to regulate the credit card industry (see our blog entry on Credit Card Rates Going Up for details, but as the expert said “….the industry instantly set to work to find their way around them.”

A recent special on the PBS program Frontline pointed out the shortcomings in the original law which was modified by heavy industry lobbying.

— The bill does not regulate interest rates.  The credit card companies can still charge rates that would make the Mafia blush.

—  There was a time gap between the day the bill was signed and the various dates each provision took effect, giving the banks plenty of time to rack up interest rates on old balances (something they will not be able to do when the bill become law), add fees and penalties, and cut credit lines.  They have been actively doing all of these things.  One survey said that 50% of Americans have already had changes of one kind or another to their credit card terms.

— Small business cards are excluded from the new law.

— Debit cards are not covered.

One of the most difficult part of credit cards and debit cards is the various fees, especially overdraft fees.  Make sure you know the terms of any card you use.

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