Credit Card Regulation–New Proposals a Step Nearer

Representatives of the Senate and House pulled an all-nighter on Thursday/Friday to resolve their remaining issues with the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes a number of credit card regulation provisions. It is now hoped that the bill will reach the President’s desk for signature early next month.

In a statement issued yesterday, the House Committee on Financial Services sought to justify the new measures, saying:

We must restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them. We must create a sound foundation to grow the economy and create jobs.

Credit Card Companies Relieved

However, it is still unclear just how effective the legislation will ultimately prove. One commentator called it a 2,000 page memo to Federal regulators that only empowers–rather than requires–them to act. And, earlier this month, Elizabeth Warren, a Harvard professor and Congressional Oversight Panel chair, told Fox Business that the consumer protection elements of the new law will only work properly if those who head up the regulators are prepared–as some of their predecessors haven’t been–to side with the public against powerful financial institutions.

Credit card companies and other financial institutions were happy that the regulations were less tough than some had predicted. Associated Press reported that, on Friday: “Bank stocks soared as investors appeared relieved that the rules were not as strict as they’d feared.”

Credit Card Use Protections

According to yesterday’s House Committee on Financial Services statement, among many other things, the bill:

Creates a new independent watchdog, housed at the Federal Reserve, with the authority to ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, and other financial products, and protect them from hidden fees, abusive terms, and deceptive practices.

However, just how valuable the new law’s protections for credit card users will turn out to be is likely to depend entirely on whether that watchdog learns how to bark–and bite. Credit card companies, with their armies of lawyers, are notoriously adept at finding loopholes in regulations, and it would take a nimble and tenacious canine to contain them.

Credit Card Rewards Still at Risk

Although the new bill does not seek to regulate “interchange” or “swipe” fees (the cut of every transaction taken from merchants by credit card companies and payment networks) on credit cards, it does do so on debit cards. And, as many credit card companies are also banks, that may well mean some juggling of revenues, and a cutting back on some credit card rewards programs.

More on Credit Card Rewards

One person who already has issues with his card’s rewards program is Adam Lasnik, who’s a web master and program manager for Google. In his personal blog, which was picked up by Payment News, Mr. Lasnik complained not about the actual rewards he was receiving, but about his card issuers’ marketing. When one of his Chase credit cards was upgraded to the company’s Ultimate Rewards program, he received a glossy brochure containing 23 pages of information that could have been summed up in a very few paragraphs. He said: “I’d rather Chase, oh, I don’t know, cut out the lame marketing, saved a bunch of money on postage and stopped filling our landfills with stupidly wasteful mailings…”

Mr. Lasnik’s Chase card offers one percent cash back and no annual fee, which, he acknowledged, is pretty generous. The Discover® Motiva(SM) Card also has no annual fee, and offers up to one percent cash back, but additionally has a deal on rates. Every time your payments are on time for six consecutive months, you qualify to have one month’s interest refunded. That could be useful if you carry over balances.

Similarly, Costco members pay no annual fee on the True Earnings(R) Card from Costco and American Express, which has an exceptional cash-back program: three percent cash back on gas and restaurant purchases, two percent on travel purchases and one percent everywhere else. And you even receive a $25 statement credit after you make your first purchase on the card. Check it out.

Most popular / best credit cards according to IndexCreditCards.com visitors:

  1. 1. Discover® More Card – 0% APR on balance transfers for 12 months & 6 months on purchases, 5% cashback bonus in popular categories, up to 1% cashback bonus on all other purchases
  2. 2. Chase Freedom Card – 0% Intro APR and no Annual Fee, 5% bonus cash back in popular categories , 1% cash bank on everything else
  3. 3. Citi® Platinum Select® MasterCard® – 0% on purchases & balance transfers for Up to 18 months, APR as low as 9.99% variable. $30 statement credit.
  4. 4. Blue Cash® from American Express – Earn up to 5% cash back on gas, groceries and drug store purchases, and up to 1.5% back on all other purchases, no annual fee, fast approval under 60 seconds
  5. 5. Slate SM from Chase – 0% Intro APR, Now with Blueprint, patented fraud protection

  6. 6. American Express® Gold Card – 10,000 American Express Membership Rewards bonus points when you use the card for at least $500 in purchases within the first 3 months.
  7. 7. TrueEarnings® Business Card from Costco & American Express – 4% cash back for annual gas purchases up to $6,000, 3% restaurants, 2% travel, 1% everywhere else, 0% APR on purchases for first 6 months

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