Credit Card Regs No Credit to Congress

James Gattuso / February 22, 2010

Who said the 111th Congress has never accomplished anything? Today, major parts of the Credit Card Act of 2009 take effect. Enacted last May with great fanfare, the legislation restricts rate increases on existing balances, requires promotional rates to last at least six months, limits over-limit fees, mandates 45 days notice before certain terms of service can be changed, and imposes a host of other requirements intended to help credit card users.

So should consumers be celebrating? Maybe not quite yet. As it turns out, the legislation ran smack dab into the Law of Unintended Consequences, likely leaving consumers worse — not better — off.

As a first matter, credit card issuers have been raising rates in anticipation of the new limits. In fact, according to one report, annual percentage rates (APR) for new cards averaged 13.46% last week, compared to 11.51% a year ago. At the same time, the once nearly extinct annual fee is making a comeback.
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