New credit card regulations a big step forward

February 22, 2010

— Marshal Cohen, chief industry analyst of The NPD Group, Inc., is a nationally-known expert on consumer behavior and the retail industry. The views expressed are his own. —

These new credit card regulations should be viewed as a big step forward… and they are indeed a big step forward for consumers, especially as they are forced to confront the realities of their credit cards.

As these new credit card regulations go into effect, I hope that they will in fact help consumers manage their credit card debt more effectively. Yes, these changes are a step in the right direction, they inform and empower consumers to manage their credit better. But they still don’t replace the importance of ensuring consumers fully understand how credit cards work.

I am continually amazed at how often I learn, during the course of my research with consumers, how few truly understand that paying the minimum payment does not pay off any of their balance. These changes will enable consumers to monitor their account limits more effectively and perhaps force consumers to balance their credit cards as they might a checkbook. (Something, I’m not so sure consumers have really been forced to do, thus far.)

I think that by being forced to confront their credit card balances at point of purchase as well as being given the option to accept a ‘purchase over limit fee’ is critical in getting consumers to be conscious of their spending. Over the decades consumers have used credit cards as if they were invitations to go on shopping sprees without regard to spending limits.

These new regulations will also afford consumers a deeper awareness of bank charges. Advance notice of rates changing and the like will empower the consumer not only be more reactive to changes but proactive, too. Consumers will also have the ability to anticipate changes and seek out new or alternative banks and accounts.

In the past, consumers were made aware only after receiving their statements and in most cases, not made aware of rate changes at all. Frankly, most consumers don’t read the details of their statement and just pay off the minimum amount due without complete understanding of the statement. With these new regulations going into effect, consumers will be made aware ahead of time. This will in turn allow them to take action and take advantage of competitive offers and convert their accounts to another card or bank.

There is still a great deal of education that needs to happen on these regulations, specifically along with an education on the basics of credit card usage, but all-in-all these are important steps for consumers to take and better manage life with credit.

Click here for a list of the new credit card rules.


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And if you owe the IRS money they’ll put you on a more burdensome payment plan than the Credit Card companies. I wish the government would hold itself to the same standards as everyone else.

Posted by tmteague | Report as abusive

Becoming a responsible adult is a good thing. We should all look at the current state of the world as a learning experience. Much good can come from it.

Posted by lah9999 | Report as abusive

regulation, smegulation…the banks are wolves and consumers, sheep. the wolves will always find a way to get to the sheep!

Posted by jborrow | Report as abusive

The US consumer is dead. If you have a job, you are scared to death of losing it and real unemployment stands at 25%. I work for, and I can see why folks are pulling their hair out over the temp job being the new full time job, China stealing our mojo, Wall Street bonuses at record highs, and people taking a 10% paycut and asked to work unpaid overtime. We have the most read home foreclosure story as well as several job hunting stories

Posted by muchstardude | Report as abusive

Unfortunately, the consumer’s “big step” will cause the floor of the economy to collapse even farther. Each step taken by the various actors in the American economy–whether it’s banks, the government, consumers or corporations–simply accelerates the impoverishment of the American middle classes at this point. At the end of this, Americans will have forgotten their credit cards altogether as they learn to scavenge through the remains of what used to be a consumer-driven economy for the bargains that can be afforded by the handful pennies in their pockets.

Posted by Scriptfish | Report as abusive

Your article was very good in explaing some of the reasons why credit should be monitored. What it didn’t discuss is how credit has been socialized. No longer will the individuals that have been good stewards of their credit have the “low” rates or “0” rates on the credit card available to them, because the restrictions put on by the new bill. I see the new bill forcing the credit card issuer to limit the recovery of the overdrawn amounts by the misuse of the irresponsible credit user. The new bill is saying “credit card issuers must recover the “lossed revenue” from the irresponsible credit user and charge the responsible credit user higher fees!! There is no free lunch for the banks! They must be able to recover these lost assets; and are doing so by increasing credit rates to the good credit users. It would be interesting if you research this point.

Posted by WallyK | Report as abusive

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Posted by MsCamellia2010 | Report as abusive

Regulation is one thing, being a responsible adult is another thing. I strongly believe that it’s the person who is using the credit card need to be sensible.

Posted by alvinhop | Report as abusive