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How the Credit CARD Act Will Affect Types of Credit Cards

How will the CARD act affect you? That depends in part on which type of credit card you’ve got in your wallet.
The combined impact of the economic downturn and the restrictions placed on credit card companies by the Credit CARD Act mean card issuers will be changing how they do business in ways that will affect every credit card
Bad Credit, Credit Cards
The CARD Act’s crackdown on extremely high fees will severely curtail the ability of issuers to offer so-called “fee harvesting” credit cards. Cards with hefty upfront fees and extremely low credit limits geared toward people with bad credit.
Balance Transfer Cards
For most consumers, being able to get a balance transfer card that offers a 0 percent, 1 percent or 2 percent interest rate on a transferred balance for much more than a year will become a thing of the past.
Teaser rates aren’t going to go away, but they’re probably not going to be as lucrative for the consumer as they were.
Business Cards
None of the provisions in the CARD Act apply to business credit cards. So far, small business cards are unaffected by the Act.
Debit Cards
Debit cards have never been all that profitable for banks, but new rules on overdraft charges mean banks will make even less. Starting in July 2010, new customers will not be allowed to overdraft using their debit cards unless they opt in ahead of time. Overdraft fee income had been a big profit center for banks.
To help make up the lost revenue, many banks may start charging annual fees for debit cards, probably in the $20 to $30 range.
Gas Cards
The CARD Act will indirectly influence the most popular type of gas card, the co-branded card, which typically is issued by a bank in partnership with an oil company, and offers perks and rewards to the customer.
Low Interest Cards
In the near future, interest rates on fixed rate low interest cards, as well as cards with low introductory rates, likely will go up several points, and issuers will be even more selective about who gets these cards.
Prepaid and Gift Cards
The Credit CARD Act imposes pre-purchase disclosure of certain fees, such as inactivity fees, associated with prepaid cards and mandates that the cards not expire before five years. The new rules for prepaid cards including gift certificates, reloadable prepaid cards and gift cards go into effect Aug. 22, 2010.
Reward Cards
Rewards card issuers already have started to move away from a mass-market mentality in which the goal is to create buzz around a rewards program and get as many people as possible to apply.
Student Cards
The days of the big credit card issuers setting up tables on college campuses and offering free pizza to entice students to sign up for easy credit are over. The CARD Act prohibits that type of marketing and requires anyone under 21 to prove a source of income or have a parent co-sign to get a card.

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