GBP: The Credit CARD Act

Well, as the first salvo in a burst of blog posts over the next few days, here’s the second installment of my new series of posts called “The Good, The Bad, and the Presidential”.  This regularly-appearing series takes a look back at the various accomplishments made by President Obama in the first half of his term, and provides the same level of analysis longtime readers have come to expect from me.  Without further ado, here’s tonight’s accomplishment:

The Credit CARD Act of 2009

Established Credit Card Bill of Rights, preventing credit card companies from imposing arbitrary rate increases on customers

Also called the Credit Card Bill of Rights, this act was pushed through Congress in the spring of 2009, back before the partisanship in Congress got to be too rough (and yes, I’m well aware I’ll be saying those words again in a couple of years!).  Anyway, like many of the things coming out of Congress, this is actually a very creative acronym, standing for the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, and it’s been sort of a mixed bag at best.

Granted, the closest I’ve come to having a credit card of my own at this point are a couple of debit cards, so I haven’t experienced much of the new regulations at this point in my life.  That is, except for the part that made my bank statements and the random junk credit card offers I get in the mail easier to read in the few moments between opening the envelope and throwing the thing into my paper shredder.

I don’t know why they still send me those; going by the creepy amount of information they fill in for me, they should know that I’m under 21 and am therefore ineligible for their cards under the new law.  Now, I’m an open guy, and while I’ve chosen to share a good bit of information about myself online, banks knowing things like where I went to elementary school is just creepy; I think restrictions on what data a random bank is allowed to have should’ve been in the law.  And yes, I have seen a junk application with that as part of its pitch.  Note to any random marketers lurking out there: just because I went there doesn’t mean I want to be reminded of it.

Random aside, well, aside, according to Daily Finance, the new law did do what it was supposed to; it gave us a bit of consumer protections, or at least the illusion of protection.  It has, as I mentioned earlier, made the papers easier to read and prevented students from gaining an easy way to accrue tens of thousands of dollars in debt before they can repay it.  In addition, one reform I particularly like is it made those statements state exactly how long it would take to pay off a debt given various payment amounts.  The law also provides several protections against the games the banks love to play with your rate; they can no longer change it at will, but rather must provide 21 days notice to change a fee, or 45 to change part of the agreement.

Ah, but there’s a catch!

Unfortunately, the banks have reacted and come up with all sorts of new ways to get their money out of your pocket.  That, and they still skirt the regulations that exist.  For instance, I noted above that I still receive those “pre-screened” offers, as they’re called.  Those are a waste of time on my part, and money on theirs.  Sure I may be one college student, but even at bulk mailing rates those will add up quickly.

In addition, the banks have retaliated against the law by making cuts to their reward programs and putting a fee on, well, just about anything you could possibly do with your account.  We’re all (grudgingly) accepting of ATM fees by now, but some of the ones I’ve run across recently include a fee for receiving a paper statement, random annual fees, and the like.  A lot of these are ridiculous, but according to Daily Finance, there’s worse.  Apparently, some banks are changing the fixed rates to evil variable rates of doom!

Excuse the hyperbole, but this is more than a little sneaky, especially the “up only” rates the article mentions, which do not decline when the prime rate does.  The article also talks about people being misled into agreeing to buy the overdraft protection, but I don’t view this as particularly sinister.  Yes, marketing language may be misleading; after all, its job is to get you to sign on the line.  However, I’d be willing to bet many people don’t really read what they’re getting into.  This is a fine approach to all those blasted website Terms of Service or Software License Agreements that have been part and parcel of our digital lives since 1996, but folks, when it involves your money, for God’s sake read the agreement in full, and ask someone if you don’t understand part of it.

Wow, this post has gotten longer than I thought it would get.  I didn’t include it on the last one in this series, but this will be part of all the ones going forward.

The Bottom Line:

• It’s okay, but I can’t say I’m surprised at the results.  The private sector will adapt to anything the government will throw at it, and this is a perfect example of that.  Overall, though, it does what it was supposed to do, and I like many of the regulations that were put in place.