By Chris Wright, The News On 6
TULSA, OK -- Sweeping changes are on the way to the credit card industry. The federal government on Thursday approved new rules for credit cards. What will the changes mean to you?
The new rules are designed to protect people from sudden interest rate hikes. But, there is a catch. They won't take effect until July of 2010.
Most know the risks that come with a credit card. You may get what you want now, but who knows how much you will pay for it later.
"Right now, it's like the Wild West with credit card companies. They can raise your rates for a variety of reasons and frankly without a lot of people knowing about it," said Jake Dollarhide with Longbow Asset Management.
Financial advisor Jake Dollarhide says new rules may help settle the credit frontier. After July 2010, interest rates can no longer suddenly be raised on existing account balances.
There will also be other changes.
Companies won't be allowed to place unfair time constraints on payments, make deceptive offers of credit, or unfairly add security deposits or other fees.
"I think what we're trying to learn is that we have to have a balanced budget in Washington and in our homes. We shouldn't live on credit," said ORU professor, Dr. David Dyson.
ORU professor David Dyson believes these are the most sweeping changes to credit in decades. But, while the new rules are designed to help consumers, they may hurt credit card companies, who in turn may be less likely to extend lines of credit. The experts say that may harm those who rely on cards to make ends meet.
"At the same time, there's no such thing as a free lunch. This could actually be a strain on those with no credit, or low credit scores," said Jake Dollarhide with Longbow Asset Management.
But, Dyson says we have grown too accustomed to easy credit, and these changes likely signal an end of an era.
"Doesn't mean it's necessary just because it's available. The key is what can you afford to spend, live within that budget and be happy," said ORU professor, Dr. David Dyson.
The changes are expected to cost the banking industry more than $10 billion a year in interest payments. The experts say expect those companies to find more creative ways to get that money back from you.