This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

New Credit Card Rules Could Help Banks

Broadly speaking, the regulation will force banks to be more transparent about terms, in simple language, and will not allow them to quickly change rates or fee structures. Additionally, if they do plan on raising rates, customers will now not only get more time to opt out of the debt agreement, but also more time to pay off their outstanding balance.

The CARD Act will also ban lenders from preying on less-sophisticated consumers. For instance, the common practice of offering college students gifts or food in exchange for filling out an application will now be banned, and students will also have to prove their ability to pay before being approved.

Big banks are using very different approaches to deal with the impending changes, and the negative effect they will have on revenue and profit. They will have to be careful about the strategies they use to replace that income without angering customers and regulators.

Bank of America, for one, appears to have embraced regulatory changes aimed at helping consumers, as part of its overall push for better customer service. The bank rolled out a "clarity initiative" for its 40 million credit-card customers in November, distributing one-page explainers of terms and fees that were easy to understand. Management has warned investors during conference calls that Bank of America will simply lose revenue from practices that are being banned by regulators -- up to $800 million due to the CARD Act alone -- until the firm figures out how to spread those fees across other products and services.

Citigroup, on the other hand, has been combating the change by adding annual fees onto popular credit cards. The New York Attorney General attacked the firm for attempting to use the same tactic on checking accounts. Citigroup settled the dispute by suspending those plans.

Stock quotes in this article: BAC, C, JPM 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,425.14 +0.29 0.00%
S&P 500 1,862.18 -0.13 -0.01%
NASDAQ 4,089.9990 +3.7740 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs