Credit Card Crunch

Reader comment on: Credit Crunch

Submitted by DLN, Sep 9, 2009 13:25

After adoption of the the Unfair, Deceptive Acts and Practices ("UDAP') rules, credit card companies can no longer charge a separate price for bad behavior . For example, late fees are effectively banned. Changes in interest rates, even if caused by delinquency, are severely limited. Accordingly, credit card banks must charge all customers a higher finance charge to spread the cost of bad behavior and risk of default to all cardholders. At a time of record high charge-offs of credit card loans, it is not surprising that credit card rates are soaring.

For those who never incur a revolving balance, there is little change. However, for the poorer and less credit worthy, there will be a significant reduction of available credit and what credit is available will carry higher finance charges.

PS: Ira, you are one of my favorite writers. Thanks to Glenn Reynolds for the link.


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