ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Impact of Credit Card Reform Legislation

Updated on March 22, 2019

Credit Card Reform Legislation

 In May 2009 the Credit Card Reform Act was passed by congress in order to curb unfair business practices of credit card companies and to further give the card holder more protection.  This act will not go into effect until February 2010, a full 9 months for the Credit Card companies to prepare.   The question remains will the consumer really benefit from this Act or is someone just blowing smoke up our butts?  I guess in order to answer that we should look at how things are today, what the reform will do, and what the Credit Card Companies are doing in light of this reform.   

How Things Are Today

Today, or rather, up to a year ago credit card companies offered a introductory 0% interest rate. After the initial introductory the interest rates could remain low. If you went over your limit you are assessed an over the limit fee. If you were late on your payment you were assessed a late fee and they would move your interest rate higher.

In fact if you are late on just one card all the other cards you have would most likely see a rate increase, some as high as 30%. When you make your payment, the credit card companies puts it toward the balance with the lowest rate, thus the higher rate is still effective. They are also able to lower your limits whenever they want. Basically, they can do anything they want.

What The Reform Will Do

 The new legislation limits their abilities to change interest rate within the first year.  In fact it will limit their ability change their rates at will, which is done presently.   They will need to review all accounts every 6 months and if payments are on time, older lower interest rates are to be reinstated.   The card holder must be given 45 days notice before the interest rate can be increased. Higher rate balances are to be paid first and they must tell you how long it will take to pay off your debt.  Over the limit fees can only be charged if the customer agrees to allow the issuer to continue with the transaction.  Of course there are more things, but these I feel are the ones that affect most people.

What Will The Credit Card Companies Do

Remember the Credit Card Companies had 9 months to prepare for the changes, how have they reacted?    Many of the companies have begun to raise the rates while they are still able too.  They are increasing minimum monthly payment amounts from 2% to 5% of the balance.  They will begin charging inactivity fees and you should see the return of annual maintenance fees.    Basically by eliminating one fee, it will birth a new fee, the difference now is the new fee can be assessed to everyone.

What We Should See And Know

What we need to remember is that the credit card companies makes money in two ways.  One is from the vendor who must give a percentage of the sale to the card issuer, usually around 1%.    The other is from the consumer whether it is from the interest or from fees.  Their “worst customers” are the ones that pay off their balance every month,  so they are only making money from one source.   Instituting a inactivity fee or annual fee allows them to make money from these “bad customers”.

We will probably see “grace periods” go away.   Grace periods is actually a misnomer to the credit card industry.  With other bills such as your mortgage or car payment, the grace period is the time you can make your payment without it being considered late, usually 15 days. The credit card industry considers the end of your grace period being the due date on the statement.   So this really does not change anything in the long run.

Getting 45 days notice on rate increases is nice because it allows you more time to decide if you will accept a rate increase.   The problem here is that, although you can opt out, you must close your account in doing so.   Closing your credit card can have a negative impact on your credit report, so this may be detrimental.

Overall, the credit card issuers will not lose money as they would like us to believe.  They have devised new fees and conditions that stayed within the legislation.    Higher rates before the legislation goes into effect, new fees, and higher minimum payments all guarantee the card issuer to make money.    I foresee an increase in delinquencies and bankruptcies with the increase in the minimum payments, as consumers could  have trouble making the higher payments.


In summary, I believe the intention of the legislation was to protect the consumer, I just don’t a lot of things changing. Old fees will be replaced with new fees. Interest rates will continue to be raised. Minimum payments will go up. In the end nothing has changed, the legislation looks good on paper, it should have been put into effect immediately in order to really protect the consumer. Waiting 9 months allowed the card issuers to put things in place that would protect their profit margin and income. I do believe that a company should make a fair profit. Big Bank CEO's make millions of dollars per year, tell me these bank are not making money.  Yes I know they are not only in the credit card business, but do you honestly believe the credit card division is losing money, because if they are they pay they wouldn't get their bonus'.  Do you think the credit companies will lose money with this legislation? These are my views and my views only, I would love to hear your comments on this subject, as well. Perhaps I am missing something, so please let me know.

Do you think the new credit card reform legislation will benefit the consumer or the Credit Card Company

See results


    0 of 8192 characters used
    Post Comment
    • bgigstead profile imageAUTHOR


      5 years ago

      Linda, what does this have to do with credit card reform.

    • profile image

      Rodney Richard 

      8 years ago

      I have noticed that credit score improvement activity ought to be conducted with tactics. If not, chances are you'll find yourself causing harm to your rank. In order to realize your aspirations in fixing your credit ranking you have to be careful that from this second you pay your entire monthly fees promptly in advance of their scheduled date. It is definitely significant because by not really accomplishing so, all other activities that you will choose to use to improve your credit position will not be useful. Thanks for expressing your suggestions.

    • profile image

      Oscar Hurley 

      8 years ago

      Another thing I've noticed is the fact for many people, below-average credit is the consequence of circumstances above their control. One example is they may happen to be saddled with an illness and because of this they have high bills going to collections. It might be due to a employment loss or the inability to do the job. Sometimes separation and divorce can really send the budget in a downward direction. Many thanks sharing your notions on this blog.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)