Credit Cards

CARD Act a Homerun? Think Again.

Comments 2 Comments

During a recent interview with a Salt Lake City newspaper, I told the reporter that I gave the CARD Act a C+. How can the most significant set of consumer protection laws since, well, ever, be anything less than a home run? Simple: Because some of the CARD Act is either meaningless, unfair, based on anecdotal evidence, or just plain silly:

45-Day Advance Notice for Interest Rate Increases – There’s nothing in the Act that requires the notice to be accompanied by fireworks, so if, say, 90 percent of the cardholders trash their notices without evening opening them (and many people do), then it won’t matter if they come 45 days in advance or 450 days in advance. Meaningless!

Under 21?: You Need a Co-signer – Would you trust a 21-year-old with $10,000 any more than you’d trust an 18-year-old? I didn’t think so. There’s no evidence that proves a 21-year-old is in any better shape to manage credit cards than an 18-year-old. Anecdotal!

No More Over-Limit Fees – Thanks for motivating the credit card issuers to come up with another fee to replace the revenue they’ll lose by not being able to charge me an over-limit fee if and when I do charge over my credit limit. At least I could see that one coming. This one was also unfair to credit card issuers, as it kicks them squarely in the wallet. Unfair!

Gift Cards Can’t Expire for Five Years – What a great idea… Give me no incentive to get rid of the small deck of gift cards that have been taking up space in my top drawer for years. Without a realistic expiration date, there is less of a sense or urgency to actually redeem them… and that’s NOT anecdotal. The law should have been that gift cards HAVE to expire after 30 days. Talk about a run on the mall. It would be like cash for clunkers. This was just plain silly!

John Ulzheimer is obviously beholden to no one, which is exactly the opposite of the people who wrote or fought to weaken the CARD Act.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on

  • Jeffrey Weber

    I think a C+ might be a little generous, especially given how absurd the under 21 rules are. First off, what happens to 18-20 year olds whose parents have bad credit? Will credit card companies grant credit to a student whose co-signing parents have a 526 credit score? I doubt it.
    More importantly, while it will take at least three years for the impact of preventing many 18-20 year olds from opening credit card accounts to become measurable, it will surely hurt the credit building process. Without the benefits of a positive credit card history, banks will likely charge exorbitant fees and interest rates on credit cards and car loans when they send out happy 21st birthday credit card solicitations.
    Credit card companies were likely to aggressive with student lending, but the CARD Act will likely do them more harm in the long run.

  • Nero

    Absolutely right. Then again, Rome wasn’t built in a day. The boys on the hill will get it right. Thanks for looking over their shoulder for us!

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