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New Credit Card Rules Could Trim $10B From Industry Coffers

Law dials back crucial fees, interest rates

By Wesley Oliver,  Newser Staff

Posted May 22, 2009 1:53 PM CDT

(Newser) – A law President Obama is expected to sign today bringing new consumer-friendly rules on credit cards could cost the industry $10 billion in revenue, the Wall Street Journal reports. The legislation, which dials back various fees and interest rates, will devastate companies that target consumers with checkered credit histories and issuers reliant on specialty cards for retailers, experts say.

Most notably, the law bans companies from raising interest rates on card balances for deadbeat customers until after 60 days. Credit-card companies, which are expected to charge $20.5 billion in penalty fees this year, warn the law will tighten credit restrictions, especially for subprime borrowers. The new rules don’t take effect for another 9 months, the AP notes.

Billions in revenue collected by credit-card issuers will dry up after President Obama signs new legislation.
Billions in revenue collected by credit-card issuers will dry up after President Obama signs new legislation.   (Shutter Stock)
Credit-card logos are displayed at a bank ATM in San Jose, Calif.
Credit-card logos are displayed at a bank ATM in San Jose, Calif.   (AP Photo)
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Those portfolios that are skewed toward late-payment fees, over-limit fees and penalty repricing will be most at risk. - Craig Maurer, analyst

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COMMENTS
Showing 3 of 3 comments
Fondue
May 22, 2009 7:51 AM CDT
You can also carry loaded guns into National Parks. Thanks Sen. Tom Coburn (R-OK); real smart sir, now our kids are at risk of being shot.
skeptik
May 22, 2009 7:08 AM CDT
It's about time. Too bad the new law doesn't take effect for nine months.
Newser001
May 22, 2009 7:04 AM CDT
Responsible credit for those who act responsibly - not loan sharking. Up next, the payday advance institutions and rent to own companies who prey on lower socioeconomic class(es); blood suckers charging over 300% per annum to those who least can afford it... Realistic fees / profits, not abusive gouging.

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