Are Credit Cards Going Extinct?

Ending Introductory Rates

Credit card companies are beginning to realise that their introductory offers may not yield the desired results any longer. The Credit CARD Act has made it so consumers can pay off high interest rates first. Previously credit card companies have introduced a limited no interest ploy on balance transfers to attract customers. The new customers utilise the card and do not pay down the balance transfer. After the introductory period ends, interest begins and usually at a higher rate than the daily interest rate of the card. If the customer makes minimum or slightly more than minimum balance payments than the higher interest rate of the balance transfer never has funds applied to it because they have all been applied to the lower interest earning balance. The Credit CARD Act now allows for the higher rate to be paid first.

Better Credit Clientele

In the past, credit card issuers extended credit services to almost anyone with any income type and credit history. With the tougher credit laws that protect consumers, credit card providers are more reluctant to issue credit cards to just anybody.

No Interest Payments by Consumers

Since the inception of the world wide recession, consumers have been looking for ways to save money. The reduced use of credit cards is clearly present. Credit card use is down by over 20% and transactions are now being conducted by debit cards and cash.

The Reduction of Credit Card Fee Privileges

The Credit CARD Act has put a stop to some of the credit industries most advantages money making abilities. Before the new act, credit card providers had the ability to raise interest rates and associated fees such as over-the-limit fees. This is a sneaky and unpleasant tactic that has been employed by credit card companies since their inception. The new act prohibits them from raising rates and fees without notice.

Credit Card companies do have certain advantages such as being able to adjust rates and to capitalise on large spending accounts, annual fees, out-of-country interchange fees, and other implicated charges. With the decline of the poor credit card holder there will be a lot of rewards programs that will cease because they are basically funded by the late and over-the-limit fees of credit cards.