The government introduced new credit card rules last week. Most of these rules were to the benefit of individuals who carry balances from month to month. The main rule changes are
1. 21 day grace period on new purchases. Something similar already exists if you pay your balance off in full. However, if you carry a balance from the prior month, even as low as $1, you pay interest on all purchases from the date of purchase.
2. Beneficial allocation of payments. Some cards have tiered interest rates, so you pay a different rate for purchases, cash advances, etc. The new rule would allocate your payments to pay off the higher interest rate blocks first.
If you do not carry a monthly balance, the new rules won't have much impact on me. However, the new rules are going to cost the credit card companies money. They will have to make up on that lost income elsewhere. It would be ironic if after implementing these rules, the card companies just jack up the interest rates, since the new rules did not touch upon a maximum interest rate.
However, my concern is that the card companies try and stem their losses by rolling back on the loyalty/reward card benefits. Do I now have to subsidize other card holders because they cannot manage their money?
I'm not sure these rules will do much for those drowning in debt, or for someone who is just starting on the path to indebtness. What this country needs is better financial education, so that people better understand what they are getting into by acquiring a credit card.