Card rules changes raise bankers’ ire, draw presidential approval

Credit card rules changes slated to go in effect on Monday are winning accolades from President Obama and are garnering scorn from bankers.

On Monday, the president said that the rules changes – designed last year as part of the Credit Card Accountability, Responsibility and Disclosure Act – will "level the playing field" and "shift the balance of power back to the consumer."

Under the new regulations, credit card companies must give cardholders sufficient notice before raising rates or changing card terms. And card users must be given at least three weeks to make a payment – a rule that addresses card issuers’ odious practice of labeling a payment "late" because it was processed after an arbitrary time on the last day of the month.

The president added that the changes are "an unprecedented step in [the] administration’s ongoing efforts to strengthen consumer protections and enact meaningful financial reform."

But the American Bankers Association did not express an equally rosy outlook about the Credit CARD Act. Banks are concerned about the act’s impact on their earnings potential: The Pew Trust’s Safe Credit Cards project estimates that consumers will pay $10 billion less in fees each year once the act takes effect.

And, ABA vice president and general counsel Kenneth Clayton said last week to the Wall Street Journal, card companies’ losses make it harder for them to provide new credit to consumers.

Higher losses "make less capital available for [banks] to provide new loans," he was quoted as saying.

In a bid to offset the losses they anticipate from the passage of the CARD Act, banks are adding new fees and raising interest rates. IndexCreditCards.com reports that the average rate for cards offered to new customers is at its highest point since 2005.

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