Credit Card Bill of Rights

" Changes -- credit cards president Obama's had to sign the credit card holder's bill of rights act into law I can try to say that efficiently today. Affecting how card companies do business -- you for a look at it changes in store who'll be impacted Greg McBride senior financial analyst at Bankrate dot com. And doctor Robert Manning is the author of credit card nation the consequences of America's addiction to credit. Good morning gentlemen thanks for being here appreciate it great let me start with you. Most importantly let's explain to people at home what precisely. Is in the deal. That will impact them as a consumer -- the changes. But."

" What a -- Lexus is gets rid of some of these gotcha type practices that are flown under the radar for too long we're talking about the ability for card issuers to raise interest rates. And anytime for any reason in particular what's known as the universal default clause whereby you're late -- another issue where. Your credit card can raise your rate even if you've been on time with them. It also does away with things such as double cycle billing. And charges for last minute payments that are made either by telephone or those last minute on."

" One expressed -- Robert won't be through here what does this do you on the revenue side of the equation to the financial institutions don't want to bring up. Who the biggest lenders are because I no coincidence a lot of them tend to be people. Who are some of the bigger TARP recipients. What disputed these cats."

" We'll keep in mind Alexis of the top ten credit card issuers have received about a 160 billion dollars. In TARP funding and we're we're talking about Citibank bank of American states that are. The Big Three. And really the key is here by not being able to go into the higher limits in terms of universal default. It really is going to hurt their ability to secure tries a lot of the debt particularly the worst that that they haven't been able to sell on the secondary market. In terms of squeezing consumers however they are able to raise those interest rates now until the bill goes into effect in February. Okay so let's let's."

" Link to people just for a second Robert. This securitization market is essential to these guys -- just in the same way that it's essential to the mortgage market it's it's it's basically given them the funding to go out there and we land it's been pretty locked up. One of the things that the Federal Reserve is trying to. Approach I guess for the health and other programs. What does it do -- it impacts the securitization market does it mean that you and I will have less tax democratic. Well right now I mean that's."

" With the federal government is done by lowering the Federal Reserve fund rates almost zero so right now liquidity is not a crucial issue. These banks have access to the federal guaranteed liquidity fund which is essentially free insurance they're trying to unlock these markets to offset. The loss of future revenues from these reset -- much higher. Credit card fees that the industry has been able to arm included in the packaging of the step in the securitization --"

" You know -- a lot of people are talking about the negative unintended perhaps consequences of what this might due to the people who actually pay on time or summer that. Best creditors what are some of the implications for how they need to look to make up the loss in revenue. That could be generated as a result of the sale."

" Well the biggest game changer is the fact that card issuers won't be able to change rates on an existing balance until the card -- sixty days delinquent so. Because of that everybody including doesn't have been very good credit are going to have to get accustomed to lower credit limits higher interest rates and higher fees. Then we've seen in recent years because they won't be able to change that raid on that existing balance until the cardholders seriously delinquent. Citing guests you know that's the biggest thing and as doctor Manning noted a moment ago. This is the legislation won't take effect until late February to the next nine months brace yourself you're going to see issuers continuing to raise those interest rates. And do so while they can't before they lose the ability to do so."

" Eat -- but what -- specifically part of this legislation was directed toward the college community toward -- into getting an hour Regis manifold for patients. How will this impact them and ultimately the parents. Who probably foot the bill these credit cards right."

" And the the big issue here is that you can't market the students 121. In less they can verify that they have an income to support the line of credit. Or the parents have to cosigned. Of course the big issue here is that we're talking about a recessionary period -- It's we've seen a big spike in average debt levels among college students for their credit card debt. And the unintended consequences as many parents are going to be relying on their kids to get credit cards that."

" now back at home. You know but you mention great -- nine months to go before it officially goes into effect in the meantime. I'm assuming that we need to ourselves be looking at her statements a lot more aggressively to protect ourselves against. Any of these fees and perhaps even get on the phone with these guys and say hey wait a second. But it doesn't empower us."

" Yeah I absolutely pay very close attention not just of the statements that to any correspondence -- get from your -- different things you want to be on the look out for. Increases in your interest rate. Reductions in your credit line that will continue and and the legislation does nothing to change that either and then also the implementation of BCU starting to see higher fees for things like balance transfers and cash advances. And that's going to continue as."

" Well I have noticed that indeed RA add great thank you very much doctor Robert Manning as you well pre having."