Nationwide Home Mortgage Loan Company

Credit card companies have had carte blanche to change the rules mid game for the people they choose to offer credit to for sometime now. Before the viral explosion of credit cards this was not such a ?big deal? mainly because credit cards were predominately carried by people with good credit.

In today’s financial climate credit cards are an almost necessity to a large segment of the population. Most people that have credit cards now days are carrying a balance on them from month to month. Changing the rules on these folks can sometimes create huge hardships.

A number of years ago credit card companies introduced a clause that they called “universal default”. This term, loosely defined, means that if you mess up their payment, anyone else?s payment or your credit score drops they can raise your rate. Lovely isn?t it? Many credit card holders saw their interest rates almost double overnight on thousands of dollars due to a slight credit score drop.

Again, in today’s financial climate most people are ill prepared for a $100 -$200 per month hit to their budget. In response to mounting pressure from state legislators most companies are now curbing this practice.

A number of lawmakers in Washington have recently taken aim at a number of the top credit card companies. They have suggested massive reform for credit card issuers that range from late fees to interest rate caps. In response to the threat, credit card companies have begun reeling in some of their more questionable practices to head off the perceived threat. It seems that credit card issuers would rather police themselves than have ?Big Brother? dictating fair business practices for the entire industry.

However, some lawmakers feel that an added benefit to tightened restrictions will limit the amount of cards that are distributed and reduce credit card debt nationally. We at Directbanc.com agree that change needs to occur industry-wide to better protect consumers, but are wary about over zealous legislation.

Historically, when Washington legislates how lenders lend money to protect the ?less fortunate? the less fortunate do without lending. More than five bills are pending in Washington pertaining to credit card lending practices and Nevada has just passed legislation mandating the end of universal default provisions. We will keep a close eye on this issue to see how this affects the industry as a whole.

Tags: credit card debt, credit card issuers, Credit Cards, financial climate, interest rate caps, state legislators

This entry was posted on: Thursday, February 28th, 2008
Other Categories: Credit Cards
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