- The Washington Times - Thursday, June 4, 2009

NEW YORK | New credit card legislation is expected to have a dramatic impact on the national lending landscape, the chief financial officer of Capital One Financial Corp. said Wednesday.

Last month, President Obama signed into law sweeping credit card reform legislation to protect debt-ridden consumers from surprise charges.

Speaking Wednesday at the Keefe, Bruyette & Woods Diversified Financial Services Conference, Capital One CFO Gary Perlin didn’t give specifics about how the law will affect the McLean-based lender’s costs or revenue.

He did, however, acknowledge that there will be a lot of “reinvention” of pricing and fee structures industrywide.

Some areas that will see major changes include the ability for a lender to adjust or reprice outstanding debt, and how much they can charge consumers in various fees, Mr. Perlin said.

Nearly 80 percent of Americans have credit cards and half of those carry a balance, according to the White House. The Federal Reserve estimates that the nation is about $2.5 trillion in debt, a figure that does not include home mortgages.

The new credit card rules prohibit companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs. A customer also will have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender will be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.

And consumers also will have to receive 45 days’ notice and an explanation before their interest rates increase.

Despite being touted as a victory for consumers, financial experts have said the bill could have unintended consequences as credit card companies look for ways to make up for potential lost revenue.

Those measures could include more cards with annual fees and the loss of a grace period before interest accrues, which would affect even those consumers who pay off their balance each month.

Shares of Capital One fell 54 cents, or 2.2 percent, to close at $23.91 Wednesday.

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