Last May, the Federal Reserve proposed sweeping new credit card regulations. The regulations, aimed at helping consumers, may in fact have a measured negative impact instead. How could a consumer-centric initiative backfire? By limiting the ability of credit card companies to offer 0% APR balance transfers, among other things.
The issue lay in one of the main initiatives: prohibiting banks from repricing pre-existing credit card balances. Why this may sound like a good thing, Discover’s (DFS) CEO was asked if the availability of balance transfers would be effected by the new regulations. His response was sobering, as he stated the new regulations, “would and could change how we execute balance transfer offers.” When asked if this would be an industry wide issue, he quickly responded, “certainly.”
Repricing current balances allows banks to manage risk, particularly the risk associated with extended generous 0% APR deals. However, should the proposed changes to the the Federal Reserve Board’s Regulation AA (Unfair or Deceptive Acts or Practices), the ability for consumer who lack the highest credit scores to get a 0% balance transfer may be hindered.
With many expecting this legislation to clear before year’s end, and that little credit crunch issue still lingering, this is not the time to be sitting on the sidelines piling up interest expense. Take control of your finances with a 0% APR balance transfer soon, as you may not be able to do so later.
You May Be Interested In
- September 2011 Report On 0% APR Balance Transfer Credit Cards
- Rewards: Debit Cards Versus Credit Cards
- Why Consumers Need To Know What A Schumer Box Is
- Debit Card Fees: Is it Time to Switch to Credit Cards?
One of the unfortunate side effects of America’s collective belief that the economy is heading for a recession is that many consumers have ceased looking for credit cards, despite the [...]
By their appearances alone, debit and credit cards are nearly identical products, yet their terms vary dramatically. Debit cards directly withdraw money from a checking account, while credit and charge [...]
Every credit card offer contains a virtually identical table, listing all the applicable terms and conditions. These banks are not just doing this to copy each other, they are required [...]
As major banks continue to pile on debit card fees, many consumers are re-evaluating their decision to use debit cards. As a free product, debit cards were a great way [...]
