The CBS News headline, U.S. Tightens Screws On Credit Industry, was not unexpected.
With the government cracking down on credit card companies’ ability to increase rates and impose penalties, some wonder just how lenders will make up for the vast amounts of revenue they stand to lose.
And as credit card issuers ponder the ramifications of the proposed rule changes passed by the Senate Tuesday, they may face more bad news.
The Obama administration, trying to rein in abuses exposed by the financial crisis, is considering creation of a regulatory commission to protect consumers of financial products such as credit cards and mortgages, according to administration and industry officials.
On Tuesday, the 90 Senators passed what is being called a credit card bill of rights. This is expected to be signed into law by the end of the week. Under that legislation, lenders would have to give 45 days notice before a rate increase, extend promotional rates for at least six months, place bans on rate hikes on new cards during the first year and deny cards to anyone under 21 unless they can pay off their bills.
In Canada, earlier in the month, Jim Flaherty, Federal Finance Minister, indicated that Credit card regulations could come by the end of the month. Although the lenders may have concerns, their customers will be very supportive of these credit card changes.
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