Credit card rules likely to change

The Senate voted 90-5 to overhaul regulations governing credit cards. "This is a victory for every American consumer who has ever suffered at the hands of a credit card company," said Sen. Christopher Dodd, D-Conn.

Senator Harry Reid of Nevada pounded his chest and noted, “We stood up for consumers and stood up to abusive credit card companies,” The Senate's "courageous" move followed a 357-to-70 vote in the House last month. Differences still need to be ironed out, but in this atmosphere, that should come quickly.

But "what has been a short-term revolving unsecured loan will now become a medium-term unsecured loan, which is significantly more risky," said the president and CEO of the American Bankers Association. He added, "It is a fundamental rule of lending that an increase in risk means that less credit will be available and that the credit that is available will often have a higher interest rate."

The truth is probably somewhere in between. Do credit card agreements really need to have all of that fine print that few understand or take the time to read? But what concerns me is that those who have been paying their bills on time, and paying them in full, will now be subsidizing consumers who default or pay slowly.

The ramifications: Reward programs and grace periods could be pared back, while no-annual fee cards may become endangered.

I realize there are abuses among some card companies. But Congress' haste to pass legislation will likely go overboard and unintended consequences may abound.