Credit Card Reform 2010 - Predatory Lending

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Companies that are classified as predatory lenders are known to seek out clients who are more likely to have major difficulty making payments, for the sole purpose of taking advantage of the fees and interest that will accrue. If you went to college, you were probably approached by one of these companies, offering you free pizza or a magazine subscription if you sign up for a free credit card. Of course, you end up paying for those incentives with high interest rates and fees.

There are two changes that have taken place to prevent this. First of all, credit cards companies who use affiliate programs to entice you must stay at least 1000 feet from college campuses. Those who only promote and market their own services, though, can still come on the grounds, though. Secondly, companies are prohibited from issuing cards to anyone under 21 without a cosigner signature or proof of adequate income.

Most people understand subprime as a mortgage term, but it applies similarly to credit cards. In either case, a lender can issue credit to someone who doesn’t usually qualify for credit. Upon this approval, they attach a high interest rate because their borrower's history of poor credit behavior makes them a liability. The new credit card reform 2010 laws prohibit credit card companies from charging you more than 25% of your available limit in your first year.