Credit Card Industry Braces for Big Changes
Congress’ credit card reform bill will prevent companies from arbitrarily raising interest rates, but it could also tighten available credit. A reporter explains the measure.
GWEN IFILL: The new credit card regulations will mean big changes for consumers whether they pay on time or not. Card companies won’t be able to raise interest rates unless a payment is more than 60 days past due. If the borrower then pays on time for the next six months, the original interest rate kicks back in.
Also, if a borrower pays more than one interest rate — say, for cash advances and for charges — payments must be applied to the higher interest rate balance first.
The law would also limit credit for anyone under the age of 21.
Joining us to explain its impact is Nancy Trejos of the Washington Post.
Welcome, Nancy.
NANCY TREJOS, Washington Post: Hi. Thanks for having me.
GWEN IFILL: What’s the big problem this was designed to fix?
NANCY TREJOS: Well, there was a problem with the way interest rates were being charged. Credit card companies were raising interest rates on existing balances for any time, for any reason. They were also charging excessive fees, not giving consumers enough time to make their payments, and they were doing some aggressive marketing of credit cards to college students, to people under 21.
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