Credit unions may face a market for credit cards where some of their traditional consumer card advantage will be lost, thanks to the credit card reform legislation recently signed into law.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 outlaws many of the practices, such as double cycle billing and universal default fees that consumer advocates have criticized and that few, if any, credit unions have done.
Credit union card issuers will also have to evaluate their card programs to determine how they may need to be changed to comply with the law. For example, credit unions affiliated with colleges or universities with significant student populations may need to change the way they market their cards to students under 21 to comply with the law that requires any such student card holders have co-signers.
But Ondine Irving, a credit union card consultant and analyst, maintained that credit unions are likely to retain their advantage with consumers even if bank card issuers have to change some of their practices.
"The fundamental difference between credit unions and banks hasn't changed," Irving observed. "I believe the banks will seek ways using other fees and charges to get around these rules. Credit unions won't use things like that so the difference between them will remain."
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