Consumer banks are rolling out new lines of basic credit cards in anticipation of a law passed by Congress and signed by President Obama earlier this year:Bank of America announced Thursday that starting in October, consumers will be able to apply for its Basic Visa card. The new card offers one rate for all transactions -- including balance transfers and cash advances, which are typically charged different rates than purchases. That one rate, prime rate plus a margin of 14 percentage points, would only change if the prime rate fluctuates. There would also be a flat late charge of $39. Many companies charge late fees based on the amount owed....Bank of America's Basic card won't impose a fee when customers exceed their credit limit; under the new law it must be disclosed before the transaction goes through. Discover and American Express recently announced that they were eliminating over-limit fees."Some of what they're doing there is eliminating some of what caused the anger and resulted in limits on what they can do," said Ed Mierzwinski, consumer program director for U.S. PIRG, a consumer advocacy group. "They're responding to market demand for a card that people can understand, that won't require a 45-page disclosure. It's pretty close to plain vanilla in some ways."It's no coincidence that Mierzwinski is saying "plain vanilla" in this context. One major function of the Consumer Financial Protection Agency that the administration hopes to create this fall is mandating that all lenders, whether they offer mortgages, auto loans or what have you, offer a line of plain vanilla products, like these credit cards, so that consumers have a reliable and safe option when they need credit. More exotic credit lines will still be available, but you'll have to demonstrate you understand what you're getting into before you sign up for those. Consider these cards a preview of a post-CFPA world, not the economic apocalypse foreseen by business interests.It will be interesting to see how consumers respond to these new cards. I'd consider switching from my current card to save some hassle.Update: Commenter Swift Loris has a good catch after the jump, looks like B of A is still being tricky, tricky. That said, at least this is an interest rate hike that is not entirely arbitrary.
-- Tim Fernholz
