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Credit card reform and you
How a pending law to tamp down abusive lending practices could affect your wallet
 

What happened
At a town hall event in New Mexico, President Obama urged Congress to send him a bill to sign by Memorial Day that would curb what he described as misleading and abusive lending practices by credit card companies. The House passed a version of the bill in April; the Senate is still working on its version. (The New York Times)

What the commentators said
The final law is up to House and Senate negotiators, said Brian Tumulty in New York’s Lower Hudson Journal News, but the “most significant change” in both versions would bar lenders from raising your interest rate on existing debt, if you pay your bill on time. They can raise your rates, with 45 days’ notice, but you’d always pay back the part of your card debt with the highest rate first.

Another possible change could dim plastic's allure, said Sudeep Reddy in The Wall Street Journal, by making it easier for retailers to offer discounts to customers paying with cash or check. Stores pay 1.5 percent to 2 percent of credit card transactions to the card networks, and a Senate amendment would keep the networks from punishing stores for offering cash-only prices.

The credit card industry has “unsavory practices” that need changing, said Barbara Kiviat in Time, but the problem “isn’t just credit card companies—it’s you, too.” There is “piles of evidence” that people make dumb money decisions when they pay with credit cards, even when they know the risks and fees. Nothing Congress does can change that.

 

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