By David Ellis, February 19, 2010
The new credit card law that was recently issued is set to take effect Monday. The CARD act is estimated to cost banks and credit card issuers quite a lot in revenue. Current estimated losses are at more than 5.5 billion in 2010 and a total of 50 billion in the years through 2015. The estimated loss in revenue is due to the restrictions on when banks can increase annual percentage rate for cardholders. Under these new laws banks are restricted from increasing APR on current cardholders, and will now be required to wait 60 days before raising the APR of delinquent customers.
In order to counteract the effects of the CARD act on many institutions have raised the cost of existing fees and created new fees. According to this article the early-stage delinquency rates have dropped, a positive sign since loan losses are on the rise more than ever. National unemployment has finally dropped below 10% last month, another positive sign for the U.S market. Institutions must now find ways to increase profit without decreasing the amount of credit card customers, by making the credit cards along with all the fees somehow more appealing to customers.
The new credit card law that was recently issued is set to take effect Monday. The CARD act is estimated to cost banks and credit card issuers quite a lot in revenue. Current estimated losses are at more than 5.5 billion in 2010 and a total of 50 billion in the years through 2015. The estimated loss in revenue is due to the restrictions on when banks can increase annual percentage rate for cardholders. Under these new laws banks are restricted from increasing APR on current cardholders, and will now be required to wait 60 days before raising the APR of delinquent customers.
In order to counteract the effects of the CARD act on many institutions have raised the cost of existing fees and created new fees. According to this article the early-stage delinquency rates have dropped, a positive sign since loan losses are on the rise more than ever. National unemployment has finally dropped below 10% last month, another positive sign for the U.S market. Institutions must now find ways to increase profit without decreasing the amount of credit card customers, by making the credit cards along with all the fees somehow more appealing to customers.
This law is good for consumers, and bad for the financial institutions. It actually is fair because now they cannot raise your rate so dramatically all at once.
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