Credit Card Companies Race To Beat the Credit Card Act
Michigan credit card rate hikes; it’s everywhere you look. Credit card companies are raising credit card interest rates like you would not believe, unless you are a victim of this latest trend. It’s a trend that’s hurting consumers who are already struggling with debt and unemployment, while the credit card companies CEO’s are “struggling” to keep their million dollar incomes.
The Credit Card Act of 2009 that was signed few months back by President Obama wasn’t supposed to go into effect until 2010, but with the amazing rate at which credit card companies are raising rates in Michigan to beat the imposing Act, congress is deciding whether to enforce the new rules immediately.
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According to the New York Times, the immediate starting date vote has passed through the House, and will be voted upon in the Senate in the coming days. When it passes the Senate, credit card companies will no longer be able to instantly raise your rates, they will have to give you 45 days notice and options for repayment.
Rate hikes are happening across the board with every Michigan credit card company. They are all racing to beat the Credit Card Act deadline, all racing to make an extra buck, and American consumers are suffering. Whether your credit is nearly 800, or below 500, you are getting a rate increase and probably a limit decrease without any warning. On top of those interest hikes and limit decreases, credit card companies are charging new and outrageous fees for everything under the sun, hoping to make up time before the Credit Card Act gets enforced.
A study by the Pew Charitable Trusts, released late last month, concluded that the 12 largest banks, issuing more than 80 percent of the credit cards, were continuing to use practices that the Fed concluded were “unfair or deceptive” and that in many instances had been outlawed by Congress. – New York Times
The reason for all of these increases is the amount of unclaimed and unpaid debt floating around out there. Well, that’s according to the credit card companies. It’s true that the percentage of credit card debt that the credit card companies have written off has soared to 9.6%, but every consumer is being punished and not just the ones not making the payments.
“We sell credit; we don’t sell sweaters,” said Kenneth J. Clayton, senior vice president for card policy at the American Bankers Association. “The only way to manage your return is through the price of the product or the availability.” – New York Times
Credit card companies are racing to create new credit card programs that will adhere to the new credit card rules. Some, who are trying to win back consumer’s trust, are creating cards with no rewards and one interest rate across the board. Others have stopped charging fees for exceeding credit limits, while still others are offering options for paying down debt more quickly.
The days of walking into a Detroit store and just throwing something on the credit card are probably over due to the higher interest rates, lower credit limits, and the tough time you’ll have even trying to get a credit card in the first place. With the new Credit Card Act of 2009 comes stricter rules for banks and thus the banks are going to enforce even stricter guidelines for credit approval.
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