New voter surge in early voting could sway battleground states in 2024 US presidential election    Civil Defense urges caution amid forecast of heavy rain to hit most Saudi regions until Monday    What's in it for FinTech startups in events like Biban24    Al Nassr and Al Hilal share points in intense Riyadh Derby draw    ImpaQ: Riyadh to host first Impact Makers Forum in December    Saudi Arabia ranks 12th globally in international visitor spending in 2023    SFDA chief discusses investment opportunities in food and pharmaceutical sectors with Chinese companies    Riyadh's Sports Boulevard receives Platinum ActiveScore certifications    Saudi Arabia refutes claims of rising worker fatalities, highlighting low work-related death rates    US says around 8,000 troops from North Korea are stationed in Russia's Kursk region    Spain mourns as death toll passes 150 in catastrophic floods    Seven killed in Israel in deadliest Hezbollah rocket strikes in months    Cyclists on phones face jail under Japan's new traffic laws    Hidden sugars in Asia's baby food spark concerns    Saleh Al Shehri strike seals Al Ittihad's Sea Derby win over Al Ahli    HONOR unveils pre-order of the stunning HONOR MagicBook Art 14 Featuring an ultra-slim design, HONOR Eye Comfort Display and AI Cross-OS WorkStation    Derby Week makes its debut in the Roshn Saudi League    Al Nassr eliminated from King's Cup after a defeat to Al Taawoun    Teri Garr, Young Frankenstein and Tootsie star, dies at 79    Indonesia Days event celebrates cultural diversity at Al Suwaidi Park    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Muted Eid celebrations for millions of Nigerian Muslims    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Credit card bill

The credit card bill signed into law Friday by President Barack Obama will hurt an industry condemned for nickel-and-diming its cardholders, but falls well short of being a panacea to recession-battered consumers.
Bank of America Corp, Capital One Financial Corp, Citigroup Inc, JPMorgan Chase & Co and other card lenders will face new restrictions on rates and fees and be required to improve both the amount and speed of their disclosures.
That would pressure an industry already experiencing heavy losses from the roughly 90 million households that carry cards. These losses are expected to worsen as the year wears on.
“Issuers have taken a body blow,” said Bill Hardekopf, chief executive of LowCards.com, a credit card comparison website. “They have to make up some of this lost revenue. They are for-profit companies and their shareholders expect it.” Yet the law does not set absolute limits on rates and fees, which issuers have real incentives to raise. The economy is not yet in recovery and some issuers, including American Express Co, have reported that more than 10 percent of cardholders' debt may never be repaid.
“A lot of consumers have a false sense of security they're going to get relief,” said Curtis Arnold, founder of CardRatings.com in Little Rock, Arkansas. “The average rate now is 13.8 percent and I could see it going north of 15 percent by early next year. When issuers report charge-off rates in the double digits, it is scary stuff.”
At a White House signing ceremony, Obama said card companies must uphold “basic standards of fairness, transparency and accountability.
“We expect consumers to live within their means and pay what they owe,” Obama said. “But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.”
Card companies will have to wait to raise rates on existing balances until borrowers are 60 days late. They must also apply payments in excess of minimums first to balances with higher interest rates and will be unable to jack up rates when customers fall behind on other accounts. Issuers cannot charge over-the-limit fees unless customers ask for the extra credit.
Some people who pay bills fairly fast will also benefit. “Double-cycle” billing, where issuers look at balances over a two-month period to calculate finance charges, is out. Issuers that use “risk-based pricing” to raise rates must use that method to lower rates on healthy borrowers. And some rules that punished customers whose timely payments got stuck in the mail or lost in card companies' files are also going away.
But issuers can make up lost revenue from customers who are new or have good credit. This includes the roughly one-third of cardholders who generally pay bills on time.
Issuers might charge new customers higher rates at the outset. They might also reduce credit limits, or make it harder to obtain reward perks. Hardekopf expects resurgence in the annual fee, which he said only one in five cards has now. Robert Hammer, who advises card companies as chairman of RK Hammer Investment Bankers in Thousand Oaks, California, expects issuers to slash at least 10 percent of what he said, was the $934 billion of credit they extend now.
“The legislation paints such a broad brush, by making every bank part of the evil empire,” he said. “It will cost the industry $10 billion a year. That will have a sweeping impact on an industry already crippled by the economy.”
Analysts note also that the law does not lower interchange fees, which banks collect indirectly from merchants when customers use cards. Some of this gets passed on to consumers as higher costs for merchandise and services. Earlier this month, Advanta Corp said it will stop lending to its 1 million small-business cardholders after roughly one-fifth of its debt became uncollectible.


Clic here to read the story from its source.