You see what happens when you let the free market dictate how it treats its consumers? Not only are people taken advantage of, they know they are and yet they usually can’t do much about it.
However on Feb. 22, the Obama administration finally took steps to rein in predatory practices by banks and credit card companies. Did they go far enough? Probably not, but you have to credit somebody for finally standing up to financial institutions that for many long years of deregulation had their way and astronomical profits too.
The new credit card laws seem like no brainers if we are to believe that the American economic system actually cares about its citizens, but here are a few new laws that consumers should be aware of.
Banks used to be able to raise interest rates on an account at any time they wished. Even if your credit line was perfect and your payments were not late, it was at the discretion of the banks to increase the amount of interest you paid at their leisure. Now the interest rate cannot be raised within the first year after an account is open.
But if the bank feels it necessary to increase the amount of private jets their CEOs parade around in, then they can still raise interest rates if they notify the cardholder 45 days in advance.
If during a time of reckless spending, i.e. your college years, you added up the amount of credit available with interest rates with ongoing purchases, it might have been difficult to comprehend how long it would take before you actually pay off that monster payment. From now on the banks must detail how long it will take their cardholders to pay off the balance if only minimum payments are made.
Speaking of those debt-stricken college years, it was common practice for college students to be prime targets for credit card applications. That trend has been halted because it is no longer legal for credit cards to be given to anybody under the age of 21 unless that person has a co-signer, or can show independent means to pay back the debt.
Many more laws were enacted and anybody with a credit card or thinking about attaining one should understand the new terms well.
These are good first steps, but remain only first steps, in an effort to restore common decency in the banking industry.