You Can’t Always Follow What The New Credit Card Laws Permit

Wednesday, March 17, 2010, AM | Leave Comment

We have all heard and read stories about the new credit card laws – Credit Card Accountability, Responsibility and Disclosure – frequently know as CARD – Act. Let the credit experts point out the good, the bad and the ugly in the legislation that went into effect on February 22, 2010. Smart Money on its website mentioned “5 New Rules for a Healthy Credit Score” in an article published on March 16.

In the beginning of the article, the author says:

For the most part, card holders would still do well to pay on time, keep their balances low and refrain from applying for too many credit cards at once. But some of the old tenets may not always hold up, as credit-card companies continue to adapt to the new environment and look for ways to run their for-profit businesses.

The last part of the last sentence is worth thinking about. The credit card companies look for ways to run their for-profit businesses. In my mind, that raises a flag about the 5 new rules. No matter how you churn and turn it, any profit for the these companies is a loss – in general – to the consumers. It’s hard to imagine that both would come out ahead or both would lose, short of declaring bankruptcy at either end.

Granted the new CARD law provides some protection to the consumers, we the people, but no laws ever have been created by humans throughout the history of mankind that will always protect the Poor, the Orphans and the Destitute (POD). Those are the folks who have lost their jobs, declared bankruptcies, lost their homes and their livelihood completely. It does not matter to the rich and the higher middle class folks what effect the new laws would have on their financial lives.

If you have lived and have the intentions of living free of stinking debt, whatever the laws permit you and you follow it, make sure that you don’t go overboard. It’s your financial life. The credit card companies exist for one purpose – to make a profit. That is a given. How they do is their business and what method they apply is their prerogative. Our financial life must not be based on their rules but more on our own personal ethics and moral values.

In a Nutshell
The more important point that I can make is to live your financial life within your means and not go overboard. No matter what was in the old credit card laws – if there were any – or what is in the new law, it’s not always correct to follow FICO or some other score calculation. Live within your means and FICO will follow you instead of you follow FICO.

Always keep in mind that charging bills to your credit card is borrowing money. You are renting money. Whatever you rent, you must return it to its original owner with every part intact. That way you would do fine – new laws or old laws should not make much difference.

If your credit score is reasonably high, then surely follow the 5 rules mentioned in the article if you must. But if you belong to the POD group of folks, then read the article carefully but you don’t necessarily follow it. If you did, you would tend to repeat the same mistakes that got you in the POD group in the first place.

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