Credit card companies will have more difficulty in milking the most money out of their customers now that the updated law on credit cards take effect. The bill that Congress passed last year now takes full effect.
One tasty provision that would protect consumers is the part that requires credit card companies to notify customers at least 45 days before companies can hike interest rates and change fees. Credit card companies would also not be able to jack up interest rates on existing balances if customers are able to pay their bills on time.
Lenders have previously exploited both avenues to charge their customers. A study revealed that card companies earn $10 billion annually from both avenues. With the new law, that would mean less revenue for them but that would also give consumers the much-needed break especially with many still suffering from the effects of the economic downturn.
These regulations, however, will not affect company credit cards – a thing that many small business owners are not quite too happy about. Many are now resorting to credit cards for quick capital injection especially with bank loans and credit are drying up. Small business owners would get a huge break given similar protection.
Using personal credit cards for business purposes is considered a bad idea since it risks affecting a person’s credit score instead of the company’s.
Source: CNN
