The new credit-card reform bill the U.S. Senate passed Tuesday could change the way credit-card companies do business and cost those who pay their bills on time.
CNBC explains:
"Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
"It will be a different business,' said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation's biggest banks. 'Those that manage their credit well will in some degree subsidize those that have credit problems.'"
The story adds:
"'There will be one-size-fits-all pricing, and as a result, you'll see the industry will be more egalitarian in terms of its revenue base,' said David Robertson, publisher of the Nilson Report, which tracks the credit card business.
"People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.
"'Despite all the terrible things that have been said, you're making out like a bandit,' he said. 'That's a third of credit card customers, 50 million people who have gotten a great deal.'"
The Wall Street Journal provides more background on the bill:
"If Mr. Obama signs the bill, as expected, the credit-card industry would be required within nine months to change the way it does business: Lenders would have to post their credit-card agreements on the Internet, let customers pay their bills online or by phone for free and give customers 45 days notice and an explanation before interest rates are increased.
"In a key provision addressing a concept called 'universal default,' a customer would have to be more than 60 days behind on a payment before seeing his rate on an existing balance increase. Even then, the credit-card company would be required to restore the previous, lower rate after six months if the consumer pays the minimum balance on time."
