Obama's Credit Card Debt Regulations

Although the Obama administration has to a certain degree tried to fulfill the President's

former campaign promises regarding tighter restrictions and more consumer friendly stipulations for revolving credit card debt accounts, ordinary heads of household would be forgiven for barely noticing the decidedly subtle effects that the initial legislation had upon the industry. While billing statements have been formalized and expanded to increase readability and highlight the effects of compound interest (and meaninglessness of minimum monthly payments), the only substantial changes to credit card debt practices concerned what would still seem to be minor debt relief topics as far as the average borrower would be concerned.

For instance, under the new statutes, the introductory rates of credit card transfers was extended to a full twelve months and the Annual Percentage Rates for cash advances and normal purchases was formally separated in perpetuity (if one would be higher than the other, as is traditionally the case with Automated Teller Machine cash withdrawls from credit card debt accounts). No objective economic analyst would argue these regulations were unnecessary, but the amount of money saved by ordinary consumers would be barely negligible. However, on a macro level, the major banking institutions who've loaned out millions of dollars presumed that they would lose untold sums through such seemingly minuscule governmental alterations of their normal methods.

Corporations were already concerned with the rapidly increasing credit card debt balances abandoned by the card holders and eventually charged off for tax purposes by the lending institutions which inevitably coincided with the recession. That's not even to mention the incredibly elevated incidence ratio of Chapter 7 debt relief bankruptcy declaration, despite the cruelly increased penalties to credit rating and household estate written into the Untied States bankruptcy code by the previous administration. As a result, the availability of credit card debt was diminished for borrowers with problematic employment situations and a less than stellar record of paying back their financial obligations. In fact, even consumers with credit ratings above seven hundred who've never missed a bill due date (secured, unsecured, and everything in between) or contemplated professional debt relief assistance were suddenly caught by surprise as their credit balance limit shrunk without notice.

Somewhat ironically, the majority of Americans who even noticed the ramifications of the Obama inspired credit card debt regulations did so with shock and anger at their reduced borrowing capabilities. The credit freeze placed upon the most fiscally prudent and sound budgeted of our citizens was completely unintended, however, and, with consumer spending already falling and the government eager to put the national economy on the path of recovery, the unplanned cap on deficit spending arranged by the credit card debt conglomerates could have been disastrous. As happened, the country slowly righted itself even without the additional borrowing powers, and most people saw their credit card debt balances restored to near the original level once the lending institutions realized that the governmental stipulations would not overly affect their bottom line. If approval for credit card debt accounts remains a tad more difficult to obtain for those Americans who haven't yet earned the right or, rather, whose slow payments or previous reliance upon debt relief sources should have signaled an unworthiness I think we can all agree that there have certainly been worse consequences to a piece of legislation.

Obama's Credit Card Debt Regulations

By: Cole

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