The credit cards of the future are here — and they’ve improved in some big ways in the past decade.
Compared to cards in 2010, today’s credit cards are more consumer-friendly, with certain restrictions on fees, interest rate increases and unfair billing practices. Rewards and sign-up bonuses are far richer. Swiping is out, and dipping and tapping are in. Here’s what changed in the past 10 years.
Credit card consumer protections improved
In the bad old days, paying a credit card even a day late could be incredibly expensive. Credit card issuers could immediately ratchet up your interest rates after a slip-up — even on existing balances — and tack on huge late fees. And missing a due date was easy, thanks to the billing practices of some issuers.
“[The banks] made bills due on the weekend when the post office isn’t open,” says Ed Mierzwinski, consumer program director for the United States Public Interest Research Group, a consumer advocacy group that was part of a coalition that lobbied for the passage of the Card Act of 2009. “They said, ‘If you want to pay your bill last-minute over the telephone, we’re going to charge an extra fee to do that.’ They said, ‘Let’s change the days the bills are due on a random basis.’”
That changed with the Card Act, which took effect in 2010. It set limits on fees and interest rate increases, required more transparent disclosures and put the kibosh on certain unfair billing practices, among other changes.
What it means for you: The Card Act has saved consumers billions of dollars in credit card fees alone, according to the Consumer Financial Protection Bureau, which began regulating major credit card issuers and other financial institutions in 2011.
“When you look at all the changes, they add up to make the marketplace fairer.…They all kind of work together,” says Mierzwinski, who was present when the bill was signed into law.
Sign-up bonuses and rewards grew
There’s more reason now than ever to use a credit card “just for the points.”
“If you’re a rewards junkie and creditworthy — and therefore, more attractive to banks — you’ve never had more choices,” says John Grund, managing director at Accenture Strategy, a firm that provides consulting services for banks and payment providers, in addition to other businesses. And many of those options are lucrative.
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