This post is the second of a four-part series on credit card reform.

Two weeks ago the US Senate approved a credit reform bill designed to protect customers overburdened by their financial obligations and subsequent poor credit ratings. But even after the bill was pushed through the Senate, one glaring question still remains: Will the credit reform bill help the nation’s current financial mess, or will it only make things worse?

I’ll put my bets on the latter.

While the more genteel voices of protest have been claiming that the credit card companies are engaged in a slew of unethical (or at least questionable) business practices, many unabashedly accuse the credit card industry with outright loan sharking, predatory lending, and deceptive advertising.

Though some of the practices in question may change as a result of the new credit reform legislation, the fact that the Senate failed to place a cap on interest rates is definitely a big win for the credit card companies, and I have no doubt that they will take advantage of it.

Moreover, bank officials and credit industry pundits have been threatening to make up for lost income generated by riskier borrowers by going after the people with good credit (to the tune of reinstating annual fees, curtailing rewards programs and charging interest immediately on purchases). My feeling, however, is that most of it will just turn out to be a lot of hot air.

The credit card industry is in the business of making money, and it will stay that way. What we can expect instead is a transformation. Though it may be a little harder to get a new credit card once the new legislation goes into effect and it may even be a little less convenient or a bit more expensive for those who have it, the credit card companies will eventually devise other methods for incentives and “rewards” programs that will encourage people to keep spending.

In short, my guess is that the credit reform bill will result in a great divide. Those with sterling credit will just use their cards less, which may result in less consumer spending. On the other hand, those with moderate to poor credit will still be stuck in the same debt mud- just under slightly different terms and conditions.

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