Do we need a Credit Card -Bill of Rights

With a heavy rise in default in payment by credit card users, it is time for some serious analysis. Not only the credit card firms have been affected, but the users in general have also been affected. In order to match the rising competition, almost all credit card companies have indulged in extending credit to a large number of people, without doing proper check of their credit score.

In fact, an Average American today carries around six to seven credit cards in his wallet. Now, with so much credit at their disposal, most users are not able to overcome the temptation of purchasing more than what they can afford. This leads to overspending by the user, which gradually develops into a very bad habit. As a result many users begin to buy things which they do not need. Apart from this, many credit card companies also offer various schemes, which also induce users to buy more. This also adds to their plight. Apart from this, many a times, credit card companies indulge in malpractices.

In order to deal with these problems, the Credit Card Bill of Rights has been presented by Mark Udall, a well reputed US Congressman. The bill aims at directing the credit card companies to send a notice to the user before raising their rates. This would be a remarkable step as the rates and terms of the credit cards would be forced to freeze, once the cards have been cancelled by the user. The focus is on revoking the authority of the credit card companies, in regard to rise in the rates of interest and fees on the outstanding balance.

Not only that, the bill also seeks the halt of charging over the limit fees on approved transactions. Despite stiff opposition from the credit card companies and their representatives, most analysts believe that, such a bill should have been presented a long time back. It is worth mentioning that, the credit card companies have failed to mend their ways and continued to indulge in extending credit without proper check, along with several forms of malpractices, which are a major area of concern.

Some economists also fear that the bill might injure the financial sector, which is already in a very bad shape. However, despite their skepticism, the fact remains that such a step was long overdue.

The credit card sector needs to welcome the upcoming changes with open arms. This would not only help them in keeping the users satisfied, but would also save them from extending credit to people with bad credit history. By saving the users from being overcharged, the number of write offs would be far less and this would be extremely wonderful for the economy.