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Are credit card users being penalized too?

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There is no doubt that there are problems with credit cards - credit card companies have taken advantage of users with sky-high interest rates and due dates that seem right on top of each other in hopes of missing payments and charging exorbitant late fees.

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But consumers are also at fault, as in this economy it's easy to charge on a credit card and worry about paying it later. Unfortunately, later usually comes when credit card balances are beyond the reach of consumers and interest payments alone threaten bankruptcy.

Congress on Wednesday sent to President Barack Obama a bill calling for sweeping changes in the credit card business. While many will be helpful to consumers, we worry about the backlash of the law on those who use credit cards as a convenience, paying off their balances monthly.

The Credit Cardholders' Bill of Rights will prohibit retroactive interest rate hikes on existing balances and double-cycle billing - charging interest twice for balances paid on time. It will also require companies to give consumers at least 21 days to make their payment and mandate 45 days of advance notice of interest rate, fees and finance charges hikes, require payments to be applied fairly to the highest interest rate balance first, and strengthen credit card protections for young people.

These changes will go a long way in protecting the consumer on the edge or can't pay off their balance each month and end up with months and months of payments.

But banks, who oppose the bill, need to make money somehow and they full well may try to charge those consumers with good credit records who use their card for convenience and pay off their balances. Banks may impose annual fees or cancel premiums now associated with cards, such as discounts or reward points.

In effect, the legislation could penalize those who have properly used credit cards, forcing them to incur costs they shouldn't. The alternatives are to use checks, which are becoming more and more less acceptable, or carry around oodles of cash.

We hope that a well-meaning intrusion into the marketplace doesn't become an unintended nightmare for those who practice good financial management.

BEMIDJI PIONEER

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