Obama’s Credit Card Bill of Rights

Posted by: Gene M. | Feb 15,2008


Well, wouldn’t you know it, Barack Obama has a fighting chance in this election.  Certainly there’s a long way to go, but he’s a lot better poised to win the nomination than when I started to write about the candidate’s views on credit cards and the economy last fall.  I don’t want to make this a pro-candidate diary one way or the other, but I would like to go through Obama’s credit card bill of rights and see if it makes sense.

• Ban Unilateral Changes: I have to agree with this one.  Most people don’t realize that a credit card can change at the credit card company’s discretion.  This is true even if you’ve been 100% responsible paying your bill over an extended period.  It’s one of the more unfair clauses in most credit card’s terms and conditions.  
• Apply Rate Increases to Future Debt: If your debt does go up because of default, as opposed to the reason I stated above, the rate will not apply to past debt but only the debt you incur after the rate increase.  Personally, I’m a little less headstrong about this one.  If your rates went up due to default, you’re at a greater risk to pay off debt you already have, so raising overall debt does may some amount of sense.  
• Abolish Interest on Fees: This makes sense.  Interest should only be charged on purchases.  Fees should be separate.  
• Abolish Universal Defaults: This is the main rallying cry for most legislators who call out the credit card industry.  Again, I don’t find it totally off the wall for credit card company’s to raise your rates if you default on an unrelated bill.  After all, if you’ve defaulted on one, you’re a greater risk to default on all your bills.  The trouble is that most people don’t realize this is the case.

Overall, these seem like very good clauses, and they protect consumers over credit card companies.  Even though we’re in a credit crunch, credit card companies are still taking in sizable profits, while consumers are struggling, so something needs to be done to add some balance.  The truth is, the economy doesn’t need consumers to go financially bankrupt because it’s bad both for individual lenders and the economy on the whole, so instituting fairer practices for credit could mean more financial stability in the long term.  

Sponsored Resources Ads by Google