Credit cards have become vital to our economy. They greatly simplify transactions, allow for quick payment, and help a customer build a credit history. But while credit cards have great advantages, they also pose great disadvantages. Credit card companies must make a profit. To do this, these companies have devised many ways to charge extra fees to their customers. Ranging from understandable late fees to seemingly ridiculous inactive fees, credit card companies have found ways to squeeze extra money from customers. In lieu of public outcries, the U.S. Government passed the Credit CARD Act in 2009 (implemented fully in 2010) to stifle many of the ostensibly unethical actions of the credit card companies. In 2011, one year after the act began to be implemented, the beckoning question is ‘Did the Credit CARD Act benefit consumers?’ After research and careful thought, I believe the propositions in the Credit CARD Act did answer many consumer complaints, but there is still work to be done. The first question one might ask is, “What exactly did the Credit CARD Act change?” The simple answer is “many things.” To go in depth would take a while and be complicated. Instead, a simple way to view the new law is that it increased clarity for consumers and set up many consumer credit shields. While we do not have the time to thoroughly examine every proposition, I do, however, want to extract a few of the propositions I feel are important, discuss their benefits and drawbacks from both parties’ standpoints, and provide some solutions I think would make the proposition better. The first proposition under the microscope is the new age limitation on card issuance. Under the new law, credit card companies cannot issue a card to anyone under twenty-one without having a cosigner. I think this new law is both good and bad. For credit card companies, this new regulation greatly limits the risk they take on when issuing cards. Since there is a higher probability of a person under twenty-one not being able to pay off their credit card bill, the credit card company has the surety that the cosigner will assist in making the payments. Risk is greatly reduced for the company. But this law also hurts credit card companies as well. Because the law now puts a limit on card applicants, card companies will not have as many customers, which usually equals less revenue. Also, having to deal with multiple people in a card issuance raises the probability of complications. From a consumer’s standpoint, this law has both benefits and drawbacks, but it may be harder to see the benefits. Most consumers would view this law as a limitation and fail to see how it actually protects them. Here is how: common sense should tell young people not to apply for credit without having some sort of buffer to lower their risk. Common sense would propose a cosigner. But common sense is often overlooked. This law forces a common sense practice into law. While consumers may not initially like this limitation, in the long run it protects them from piling up great credit card debt, which can be detrimental especially to people under twenty-one. The major drawback from the consumer’s viewpoint is the flip of the company’s drawback. The credit card company will most likely have a lower amount of customers, and the customer will most likely have a lower amount of credit card companies. In other words, the younger consumer has a lower chance of getting approved credit because of the limitations of this law. Also, since most credit card companies offer lower lines of credit as a result of the economic downturn, consumers (especially those under twenty-one) will have an even harder time getting the credit they used to. I personally like this regulation. Many of the critics I have read dislike it. Odysseas Papadimitriou of Fox Business News said it was a “starkly apparent [flaw].” I disagree. This regulation limits the risk for both credit card companies and consumers. Limiting risk is good, especially in today’s economy. Unless the future proves this regulation faulty, I would not propose changes. In the long run, I think this regulation is good for consumers. The next new regulation I would like to look at is the new disclosure requirements. Under the CARD Act, credit card companies must disclose to consumers the amount of time it will take to pay off their balances, paying only the minimum payments. This is a great advantage to consumers but a slight annoyance for the credit card companies. It is estimated that “23% of those who participated said they're now making payments greater than the minimum as a result of the warning on the credit card bill” (Nance-Nash). The new disclosures have obviously made an impact. Information is very important. In our textbook, it is made clear that “information is the basis of decisions” (Cecchetti 5). The idea is that the more information one gets, the better decisions he can make. This certainly has been the case with the new disclosures. The only downside of this new regulation in my opinion comes in on the credit card company’s side. In order to abide by the law, they now must put a little more effort in drawing up credit card bills. Also, faster balance reductions means less money paid in (because of interest). So the credit card company is losing money? Yes, but only in the short-term, in my opinion. When consumers save money (by paying off their balances sooner), they have more money to spend. They will most likely use credit to make short-term purchases, which will be paid for by the money they saved. So in the long run, credit card companies will get that sliver anyway, it is just a matter of when they will get it. Another force is the intangible feeling of being in credit card debt. Since 23% of consumers have paid more than their minimum payments, 23% have essentially lowered their credit card debt faster than they normally would have. This means that 23% of consumers are not feeling the pressure of credit card debt as much and are more likely to have a better attitude toward credit card companies. Ultimately, companies should seek long-term relationships with consumers through customer-focused policies. This will increase business and profits with lasting results. My suggestion for this regulation is to go one step further and disclose more pertinent information. Perhaps determining what “pertinent” information is will take some time and research, but I think it will ultimately benefit both parties. Lastly, I would like to examine the new regulation regarding over-the-limit fees. The CARD Act states that consumers must inform their credit card companies if they wish to allow charges over the set limit. If a customer decides to allow limit-succeeding charges, the credit card company can charge “only one fee per billing cycle.” If a consumer opts-out of this and the credit card company still allows the transaction to go through, no over-the-limit fee can be charged (FRS). At face value, this regulation appears to be good. The consumer gets to choose whether or not they can go over their limits and they need not worry about over-the-limit fees if they have requested not to. “The number of accounts hit with over-the-limit fees, for charges beyond the credit limit, ‘virtually disappeared,’ . . . dropping from 12% of credit card accounts to 1%” (Liberto). This is good news, right? Yes and no. Over-the-limit fees have obviously decreased, but the principle of a credit limit is just that, to limit credit. By giving customers the option to choose whether or not they go over their limits defeats the purpose of having a limit in the first place. My proposition is to let limits stand as they are. Consumers should be aware of their spending to the point that they have a general idea when they will brush against their limit. When this happens, their card should be denied and they should have to find another means of payment. Credit limits help keep consumer credit in check. Ignoring them does not help matters. Some may argue that emergencies happen and a transaction must occur. What if their credit limit was reached? Perhaps allowing over-the-limit charges would help in some cases, but the practice is still poor. If this faulty allowance must be accepted, I agree with the way the CARD Act has implemented it. Customers should in no way be held responsible if they attempt to go over the limit without opting-in. Likewise, opted-in over-the-limit charges should be billed only once every billing cycle. Time will tell if this regulation stands up and if both companies and customers find it adequate. The Credit CARD Act of 2009 was a major event in the world of credit. Many limitations were imposed, with some parties rejoicing and others retreating. So what is the verdict? Sheryl Nance-Nash of DailyFinance says, “Mostly, it's been a mixed bag.” I tend to agree. Though we did not examine every single proposition in the act, my research has shown that the results have been pretty similar across the board. All propositions have their pros and cons and, for the most part, need to be retooled before they are fully helpful. Personally, I think the lawmakers had the wrong focus. While reading through the new changes, I got the idea that their focus was to reform current credit card policies. I think they need to reinvent credit card policies. It is clear that the current laws are frustrating to many people. If the lawmakers when back to the drawing board and started over, taking into consideration our current economy and the current needs of the people, I think we would see a more beneficial and applicable CARD Act.