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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 -- but the impact will vary depending on the type.

"I think we'll see a reverting back to the model of the 1980s -- annual fees and higher interest rates," says Dennis Moroney, research director for TowerGroup, a financial services industry research and consulting firm. "But in those days, everything was pretty plain vanilla -- there will be much more creativity now."

One by one for each of 10 types of cards, here's how experts see the CARD Act's impact:


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Michael Nystrom's picture

Thanks for the article

Debit Cards

Note what it says on 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, Moroney says. Or, banks might charge for other services, such as financial planning or linking accounts to help customers avoid the embarrassment of having their card declined at a store, Robertson says.

Banks probably will get innovative; for example, providing more rewards debit cards and more hybrid credit/debit cards, as well as cards geared toward students who now cannot get credit cards because of the new law, experts say. Also, banks will reinforce responsible management of personal finances -- maybe with more programs similar to Bank of America's BAC Keep the Change, in which the bank automatically rounds up each check card purchase to the nearest dollar and transfers the difference to the cardholder's savings account. "We'll see more products that tap into consumer appeal," Moroney says.

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Debit cards are a pressure point for banks. Refuse annual fees on them!

He's the man.