Credit card holders who have been struggling with persistent debt may be getting a break. "The days of any time, any reason rate hikes and late fee traps have to end," Obama told AP press corp members.
According to figures released by the White House, Credit card debt has increased by 25 percent during the past 10 years.
Mixed Messages from Government and Banking Industry
Consumers, particularly Americans, have been told by their government to save instead of spending impulsively with credit cards. With the recession digging deeper into the global economy, many people find themselves without jobs and turn to sources of credit for paying off bills and buying household necessities.
Yet during this global financial crisis credit card companies have continually increased their rates while consumers have suffered. Consumers find it difficult to save while being drained financially by credit card companies. It is not unusual for credit card companies to increase rates if a credit card holder makes a large payment on a credit card debt.
Banks have been trying to maximize their profits during this trying time for consumers because they are increasingly afraid that consumers will default on their credit card loans.
What Obama Intends to Do
President Obama wants to examine the various proposals that the House and Senate have been examining regarding consumer protection and credit card debt and quickly sign a bill into law.
The President stated that any enacted legislation must contain the following principles:
- Protections for consumers against surprising jumps in credit card fees.
- Credit card companies publish their communications to consumers in plain English (no more business speak or "legalese").
- Customer friendly consumer comparisons of credit card offers made available.
- Credit card companies that violate these principles will encounter extensive legal ramifications.
What This Means to Debted Credit Card Holders
If a consumer is in credit card debt they are in a great position to negotiate a deal with their credit card company. Banks will be trying to procure the best deal possible for themselves and will be open to negotiating with consumers. Banks, fearful of the rate freeze scheduled by the Federal Reserve in 2010, will have no choice but to undercut each other to keep or gain consumer business. Credit card companies will try to stay just higher than the scheduled rate freeze when dealing with credit card customers.
The particulars of this rate freeze have yet to be publicized. Consumers will find that these negotiation tactics are applicable to not only those with stellar credit ratings, but will also work for those consumers who have poor credit.
Maintaining financial health means keeping abreast of current credit card debt trends; stay current with credit card news when credit card debt is a budgetary concern.
Sources:
Feller, B. (2009, April 23). Obama pledges protections for credit-card users. Associated Press. Retrieved April 24, 2009, from http://news.yahoo.com/s/ap/20090424/ap_on_go_pr_wh/us_obama_credit_cards
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