The Credit Card Industry of the Future: Possible New Regulations
Aside from standards and certain federal rules set up by the Federal Trade Commission, the credit card industry pretty much runs its own show. They give customers plenty of appealing options and have been steadily taking away negative features that turn people off of their cards. Some credit card companies, however, still have certain practices that people tend to look down on. These practices, while not inherently major bad news or stealing thousands of dollars out of each person’s pocket, are still subject to scrutiny and may get eliminated in the future. That means even better credit cards for everyone.
A few proposals include larger type face for the infamous small print, as well as items on bills and other areas on your credit card information that tend to be printed in a font that requires perfect eyesight or a magnifying glass. Information that is easier to see makes it harder to people to miss, such as understanding what their late fee is or what their interest rate actually is.
Another deals with the time credit card companies give people before changes are made to their account. The main change is to the interest rate – including fixed rates. Currently the time is a 15-day heads up. The proposed notice is 45 instead.
When you fall behind on your card payments, the company can put into motion what is known as universal default. This means your interest rate can go up, because now you are a bigger risk to them and they hope it makes you more willing to pay them back. This also translates through your bills, which means if you are late on your cable bill, for example, it can be reported to creditors, who automatically make your card’s interest rate jump. Because it takes so much time to fix damaged credit, many people are starting to resent this credit move. Some creditors are already starting to halt the practice, so maybe in the future, even more will.
Fees in general are a source of irritation to most consumers with credit cards. Late fees, annual fees, paying your balance over the phone, overlimit fees, and other penalty fees add up nicely for credit card companies. If a fee is $30 and 200 people have to pay it, that is a straight $6,000 for the credit card company – and that is just a small example. And an annual fee is simply for using the card. When you think about it, an annual fee is probably the most ridiculous of all. Why should you pay to use their card when you are going to be paying them through interest and other possible fees? Credit card companies are already starting to phase out fees such as annual fees and paying your balance over the phone, which can mean other card companies decide to compete even more and cut out fees altogether.
Unclear statements is also under the microscope as people often try to figure out what exactly it is they owe, what some of the terms mean, and again, that tiny print. Some credit companies have adjusted their a statements, clearly spelling out what you bought, what your minimum payment is, when your payment is due, how much you paid on your last bill, and so forth. Newer companies offering credit cards, such as Washington Mutual, make sure to sort bills into understandable parts as they try to make their customers comfortable and happy. No company is perfect yet, but as the pressure grows, they could get closer.
Congress has already made its sentiments known by pressuring some companies to lay off the fees and confusing jargon contained in bills and rules. Continued competition and desire for more customers may work to our benefit as credit cards improve and new regulations appear.