I wasn’t certain what I was going to write about when I was asked to submit an article for InterBusiness Issues. I knew, instead, what I did not want to write about—begin by listing examples of the current economic downturn, sprinkle in rising unemployment numbers and toss it with turbulent Wall Street data, and you have the same doom-and-gloom recipe that we have been hearing and reading about. Rather, it was the simple task of opening my mail on Saturday that started the keyboard clicking.

On a daily basis, as a Certified Credit Counselor, I listen to and counsel individuals carrying the burden of credit card debt. Many over this past year have had their monthly incomes reduced due to the ever-popular “rolling layoffs” or “furloughs,” while others have lost their jobs completely. I would like to believe my colleagues and I are able to help our clients regain control of their finances.

During this past year I have also heard clients applaud the recent Credit Card Accountability, Responsibility and Disclosure Act, which is slated to impose limitations on credit card issuers manipulating consumers’ accounts with regards to interest rates and other fees. “It’s about time I got a bailout” and “These companies are finally getting what’s been coming to them” are some of the comments I have heard. My response is always a nod of my head, acknowledging and empathizing with my clients’ frustrated state of being. The majority of them are already carrying high credit card balances on multiple cards.

To me, these new laws and debates affect those whom I counsel and help on a daily basis, and I had tossed the idea as simply a topic of conversation. I, after all, am a credit card “deadbeat”—a term used by the credit card industry to affectionately label someone who pays his or her balance in full every month.

Some of the popular particulars of the legislation include:

• Limits on interest rate increases. Increases on existing balances can only happen when a promotional rate ends, if there is a variable rate or if the cardholder is late.
• Highest interest balances paid first. If consumers have balances that carry different interest rates, payments that exceed the minimum must go toward the balances with the higher rate. 
• More time to pay monthly bills. Payments will be due 21 days after the bill is mailed. No more changing due dates without notice. 
• Limits on over-limit fees. Cardholders could have transactions rejected if it would put them over their current credit limit. Fees, if they do apply, must be reasonable (Note: It doesn’t get rid of them altogether, but makes them “reasonable.”)

According to a White House press release, this legislation was “marking a turning point for American consumers and ending the days of unfair rate hikes and hidden fees.” I advocate any legislation that is in support of the consumer, as long as the consumer is learning to use credit in a responsible way. I advocate the responsible use of credit while acknowledging that if you borrow money from any lender, they should have the right to charge you interest while you are paying back the debt. This practice is nothing new. While driving to work one morning and listening to a local AM radio show, I called in to voice my opinion on the issue of credit card companies raising individuals’ interest rates for no particular reason. “People shouldn’t carry $10,000 balances on four different credit cards” was my feedback.

So who is to blame? Well, it depends on who you ask. A husband and wife who, perhaps, misused their credit cards but were making the minimum payment until their credit card issuer raised their interest rate from a comfortable 9.9 percent to 29.99 percent can surely blame the creditor. The credit card company who has to make up for their losses somehow—whether it be from bankrupt clients or new defaults every month—can surely justify raising interest rates to make money.

Back to my incident on Saturday. I arrived home to find a rather thick envelope in the mail from my friendly neighborhood credit union. I opened it and the first few words brought a slight smile to my face: “Dear Member, Great news!” Soon I will earn reward points on my Visa. Great…oh wait, the next line didn’t make sense. It read, “Due to new federal laws and regulations that impact all credit card issuers, [Credit Union] is making changes to our Visa card program. The new regulation means that, like many other card issuers, [Credit Union] must discontinue the fixed-rate Visa program.” So my fixed interest rate is now becoming a variable rate so it may be low this month and higher the next.

They’re changing my interest rate? What did I do? I have been with this financial institution since I was 15, and now I’m 32! Don’t I have union rights or something?

You’re asking, what’s the big deal if I pay my balance in full every month? It’s the principle of the matter. Suddenly all of the comments and frustration that I have listened to from clients and silently acknowledged are hitting home in a way I didn’t imagine. This new credit card reform—a change that is “marking a turning point for American consumers and ending the days of unfair rate hikes and hidden fees”—is affecting me by changing and raising my interest rate.

So who is to blame? I guess it depends on who you ask—the average consumer, the credit card companies, or the credit counselor. My family has made sacrifices and lived within our means, not used credit for things that we “thought” we needed, and paid off our balances each month. Regardless of the new law, all consumers need to do the same. For now, I’ll stay proud to be a credit deadbeat. iBi

Morgan Gee is a Certified Credit Counselor with Chestnut Credit Counseling Services in Bloomington, Illinois.