An art of self defense that employs the principles of balance, leverage, and momentum to overcome opponents.
On a recent visit to BMI FCU, our company CEO picked up their Summer 2009 Member Newsletter. It's an excellent example of how credit unions can take advantage of the opportunities presented by the CARD Act. Here is the article in its entirety.
Congress Passes Credit Card Reform Legislation
On the surface this is potentially good news. This pro-consumer legislation limits the ability of banks to play games with interest rates and fees on their credit cards.
Even better news is that your credit union will not need to make any changes to our credit card. That's right. Your BMI VISA already complies with the credit card reform act: We have no penalty pricing, no funky due date cycles, no universal default rates, no surprise interest rate hikes, no over limit fees, and no double cycle billings. That’s the good news.
Now here is the bad news (bad that is if you are still inclined to keep your bank issued credit card). Banks fully intend to make up the income they'll lose as a result of credit card reform. How will they do it? Here is how:
Less credit will be available generally, which means some consumers will not be able to obtain credit cards at all (particularly younger people); others will have smaller credit lines.
In some cases, higher interest rates will need to be charged to cover the increased risk.
Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems; the result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive.
How do we know this? Good question. The three items above are taken directly from a May 19, 2009 Press Release issued by Edward L. Yingling, President and CEO of the American Bankers Association (ABA).
So there you have it. Banks aren't really happy about how credit card reform will impact their business model and they are not going to take this consumer friendly reform lying down. As a result, the next year or so should be very interesting for consumers who hold bank issued credit cards. And by "interesting" we mean you may well be impacted by significant rate increases, more fees, and a litany of other measures designed to make up for the banks' lost income.
You could, however, avoid all this drama and just move your credit card business to your credit union. You can apply online or call/visit a branch office. After all, our credit card didn't need reformed. It's the same great credit card today as it has always been. No games, no gimmicks, no tricks; just a credit card with a great rate and virtually no fees.
Now that is one BIG Point of Differentiation!