The Credit Card Reform Act and You

This past Spring the Obama Administration passed legislation affecting issuers of credit cards which will come into effect in February 2010. The Act is designed to improve transparency on the part of issuers and introduce consumer protections that limit the ability of issuers to modify interest rates and fees on their credit cards whenever they wish.

Being Consumer-Friendly

This is (potentially) good news. Even better news is that SF Fire Credit Union will not need to make any of these changes to your credit card, as our card already complies with the Credit Card Reform Act. We have no confusing due date cycles, no universal default rates, no surprise interest rate hikes and no double cycle billings.

Bank-Issued Credit Will Be Harder to Get

Here is the bad news (for those still inclined to keep bank-issued credit cards): Banks fully intend to make up any income they’ll lose as a result of these reforms. Here’s how:

  • Less credit will be available generally, which means some consumers will not be able to obtain credit cards at all (particularly younger people). Others will have smaller credit lines.
  • In some cases, higher interest rates will need to be charged to cover the increased risk.
  • Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems. The result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive.1

In a nutshell, banks are not happy about how credit card reform will impact their business model. In the next year or so, credit card issuers intend to make up for any lost profit by preemptively adjusting rates, fees and terms prior to February 2010.

The Member-Friendly Choice

You could avoid all this drama and bring your credit card business to SF Fire.

After all, our credit card didn’t need reforming. It’s the same great card today as its always been — no games, gimmicks, or tricks — just a member-friendly credit card with a great rate and virtually no fees.




1 The three bullet points above are taken directly from a May 19, 2009 Press Release issued by Edward L. Yingling, President and CEO of the American Bankers Association (ABA).