Does The Credit Card Bill Of Rights Mean More Consumer Freedom, Or Less?

Credit card companies are tightening standards, some report.

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Back when the Credit CARD Act (also known as the Credit Cardholder's Bill of Rights) was being debated, opponents argued that the bill would not stop "abuses" of customers by credit card companies, but rather simply shift their efforts in ways that limit consumer choice.

Now, the Consumerist blog has reported all the new ways that credit card companies are trying to wring as much money out of as they can before the new rules come into place. This is a few days old, but I think it's important to note something. The blog post seems to hint that these new "mean" practices will go away when the new legislation takes effect. While most of these new practices will be regulated by the CARD Bill starting in February of 2010, it also seems that in some cases, the CARD Bill is creating new difficulties that it does nothing to stop.

Overall standards are becoming more stringent for riskier customers.

"Lets say you owe 40k in debt, and your last reported household income is 50k. Well, if you already owe 40k, and you only make 50k, how are you ever going to pay that back? So the bank is dropping the line because they don't feel they'll ever get repaid if they give it to you. You cant default on another 10k if they don't let you have it in the first place."

Why? As David John of the Heritage Foundation told me in my story on the subject:

"The bill reduces the opportunity for credit card issuers to cover their own costs on certain higher-risk categories," says David John...

If they can't cover their costs on those high-risk people, then they will take fewer risks. If that quote from the Consumerist blog is accurate, we are already seeing fewer credit opportunities as a result.