New Credit Card Laws helping those who carry consumer debts!

I just got an email from Disover. They are changing their practices to be in line with the new laws under the CARD act. It is good that the government has taken a step to prevent banks from overcharging people and stop slamming people with fees and unreasonably high interest. I am pasting a summary from my message here:

  • Annual Percentage Rate (“APR”) increases for paying late or exceeding your credit limit. We will no longer increase your APRs on your existing credit card balances if you pay late or exceed your credit limit. Your APRs on new transactions may increase to a Default Rate only if you fail to make a payment when due. However, if we increase your APRs for new transactions to a Default Rate, we may, as described below, periodically review your Account to determine if your APRs should be reduced.
  • Grace Period. Your grace period for new purchases is changing, which may help reduce your finance charges.
  • Overlimit Fee. We will no longer charge an Overlimit Fee.
  • Pay-by-Phone Fee. We will no longer charge a Pay-by-Phone Fee.
  • Balance Transfer and Cash Advance Transaction Fees. If you make a balance transfer or take a cash advance, the maximum transaction fees will be increasing to 5% of the amount of each new balance transfer or cash advance, as applicable, with a minimum of $10.
  • How Payments are Applied. Payments made in excess of the Minimum Payment Due will now generally be applied to high APR balances first. This may help you pay off your high APR balances sooner.
  • Minimum Monthly Payment. The Minimum Payment Due calculation is changing, which may result in a higher required monthly payment. Making a higher monthly payment will help you pay down your balances faster.
  • Payment Processing Time. Mailed payments received at our processing facility will be credited to your Account on the same day if received by 5PM local time, instead of the current 1PM cut-off time.
The only negatives I see is a much higher balance transfer fee and most likely higher minimum payments. Even though you do pay off your debt faster it does not mean everyone will have the ability to pay those higher payments. I have also read about banks, such as Citi, trying to push annual fees onto customers unless they spend a certain amount on their cards.

Only time will tell what credit card companies will do in the way of fees, interest, and what people will tolerate as a result of these new laws. I think it will be a positive outcome for the consumers in the long run but it may take some time to hammer out. We must all work to be free of consumer debt so things like this don't make a large impact on our financial lives!