Credit Card Education Not Regulation

Some parts of the newly enacted Credit Card Act of 2009 will go into effect this week, meaning big indirect changes for many credit card users. As of today credit card companies must mail out customers’ bills at least 21 days before the due date, a longer period than the previous requirement of 14 days. Before they make any changes to customers’ rates, companies’ must now give them 45 days’ notice instead of 15 days.

More provisions of the law will start in February 2010 with more disclosure regulation becoming effective in July 2010. One of the unfortunate by-products of this legislation is that as the credit card companies balk at the tighter rules and the potentially lowered profits, they have been raising rates before today’s deadlines and switching customers’ rates from fixed to variable in order to maximize revenue.

I found out by reading a MarketWatch article on these recent changes that my own credit card is going to start charging an annual fee for participation in the rewards program. I will probably stick with it because my annual rewards outweigh the new fee, but it is still irksome that because the government is further trying to decide what private companies can and can’t do, I have to pay new fees.

Are credit card companies really that sneaky that the people need the government to save them from deceptive practices? Maybe. I have certainly seen a few sneaky rate increases and additional annual fees, but I also check my incoming statements and do not hesitate to call my company, threatening to cancel if the unfair practice is not revoked.

In general, I think that the consumer is ultimately responsible for understanding any financial contracts he enters into, but I also understand that credit card companies often prey upon those who are financially naive like college students and immigrants of various legal status. So I suggest, that instead of penalizing the private sector and thereby the responsible credit using customers, why doesn’t the government start requiring financial management classes in high school? How about a required class that educates our populace before they can even sign up for cards about the practices and abuses of the typical American credit card company? Why create a nanny state when we could better enable people to take care of themselves in the real world? I think it could work. Besides it would create more jobs for high school finance teachers, right?

One Response to “Credit Card Education Not Regulation”

1. Jason Suriel says:

   June 13, 2010 at 10:19 pm

   A Great write up, I will be sure to save this in my Furl account. Have a good evening.