Smart Borrower Blog

Something Fishy – Bankers Love Credit Card Regulations

Jan 13th, 2010 @ 1:34 PM by Amber Nelson

The Federal Reserve has released new rules limiting the power of credit card companies to abuse consumers. Among these are the following:

  • Credit card companies may not issue cards to anyone under age 21 unless the applicant has a cosigner or can prove that he/she has the means to make required payments.
  • Card issuers must send out bills at least 21 days before they are due.
  • Card rates may not be increased during the first year of the contract, unless the original card offer included a low introductory rate (and the introductory rate must last at least 6 months now).
  • Customer payments must be applied to higher interest balances first.
  • For customers 60 days late or more on their payments, credit card issuers must drop their interest rates back to the original level when the customers pay off their balances and make on-time payments for six months.

Most of these rules go into effect February 22, and are fairly prohibitive and limiting for credit card companies.

Yet this is how the American Bankers Association has responded to the new rules:

“These rules — the most comprehensive ever seen — herald a new era for America’s credit card customers,” said Kenneth Clayton, senior vice president at the ABA. “Many practices that frustrated customers have been eliminated, and credit card users will now benefit from greater control and clearer terms for their accounts.”

The ABA said the new law “ends confusing billing practices, instituting new rules that are easier to understand.”

“They put consumers squarely in the driver’s seat by restricting fees and requiring clearer rules and improved disclosures,” Clayton said. “The bottom line is this: the credit card industry is changing and these new rules will help empower consumers to take control of their personal finances.”

I’m not the only one who feels like this is an eerie, overly-cheery reaction.

John Carney on the Business Insider blog says,

“So what are we to make of bankers loving the new regulations? Perhaps they’ve just become especially public spirited lately. Or have just given up fighting against regulations that endanger their business.

Or, maybe, they got exactly what they wanted.”

Not quite sure what that means, but for an industry that spent $6.9 million in the first nine months of last year lobbying against these new restrictions, it just feels wrong.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

One Response to “Something Fishy – Bankers Love Credit Card Regulations”

  1. Believe me…this is cheery PR meant to cast the bankers in a consumer friendly light. Remember, these are the same folks who told us the higher rates, more fees and double cycle billing were really about “consumer choice” and “serving a need” rather than bank profits.

    The ABA’s main job is to act as a PR organ for the banking industry, and hearalding these regulations as “putting consumers in the drivers sear” is really just another attempt to make themselves look good in the face of horrible press coverage of the last two years.

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