Credit Cards Change Tactics

Faced with new rules of the Credit Card Act, and the impact of the economic downturn, the industry is making changes to almost every credit card.

Balance Transfer Cards

For most consumers, being able to get a balance transfer card that offers a 0 percent, 1 percent or 2 percent interest rate on a transferred balance for much more than a year will become a thing of the past.  The CARD Act is going to have upward pressure on rates simply because the ability to adjust rates on outstanding balances is severely limited now. Issuers can't do anything about accounts that have protected balances, so they will book new accounts at higher rates of interest to make up for lost revenue from penalty fees and penalty interest.

Business Cards    None of the provisions in the CARD Act apply to business credit cards.

Debit Cards

Debit cards have never been all that profitable for banks, but new rules on overdraft charges mean banks will make even less. Starting in July 2010, new customers will not be allowed to overdraft using their debit cards unless they opt in ahead of time. Overdraft fee income had been a big profit center for banks.  To help make up the lost revenue, many banks may start charging annual fees for debit cards, probably in the $20 to $30 range.

Gas Cards

The CARD Act will indirectly influence the most popular type of gas card.If there's a revolving feature, it's going to be more expensive and involve paring down rewards.

Low Interest Cards

In the near future, interest rates on fixed rate low interest cards, as well as cards with low introductory rates, likely will go up several points, and issuers will be even more selective about who gets these cards.

Prepaid and Gift Cards

The Credit CARD Act imposes prepurchase disclosure of certain fees, such as inactivity fees, associated with prepaid cards -- and mandates that the cards not expire before five years. In the past, some expired after a year -- if you still had money on it, you lost it. The new rules for prepaid cards -- including gift certificates, reloadable prepaid cards and gift cards -- go into effect Aug. 22, 2010.

Reward Cards

Rewards card issuers already have started to move away from loyalty or rewards program.

Student Cards

The days of the big credit card issuers setting up tables on college campuses and offering free pizza to entice throngs of students to sign up for easy credit are over. The CARD Act prohibits that type of marketing and requires anyone under 21 to prove a source of income or have a parent co-sign to get a card.