The final round of changes from the Credit CARD Act is going into effect, and consumer advocates expect mixed results for the average customer. The changes are great for credit card customers, but the banks will be looking for other ways to increase revenue to make up for the losses.
The good parts of the act for consumers are going to help many people. Credit card late charges are now capped at $25, which is significantly better than the typical $39 fee before. However, if you are constantly late, you may be charged $35. Optimally, you are never late anyway.
Consumers are also protected from high fees for going slightly over their credit limit. For example, if you go $3 over your limit, the fee cannot be higher than $3. Inactivity fees are also banned. If you want to read a great post on the new changes, check out explanations of the CARD Act at Free From Broke.
I am worried, however, about the ways banks are going to make up for the costs. I have had cards start charging an annual fee. While it was free before and only the “bad customers” had to pay high fees, they are now being given to everyone. This is mostly impacting cards with good rewards programs.
The banks are also looking into traditional banking and checking accounts for revenue. The Wall Street Journal thinks that free checking might be coming to an end. My main brick and mortar checking account at US Bank is a free checking for life account. You might consider finding something like that before it is too late.
Over all, I think we are moving in the right direction. With any legislative intervention into the financial industry, there will always be some sort of workaround and fallout. Time will tell how this new law will impact the industry and consumers.
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