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"If you strip away the reward component of a credit card, it's essentially a commodity," Rick Ferguson, editorial director at marketing firm LoyaltyOne told The New York Times Wednesday.
"A reward policy … works from a branding perspective as well as a mechanism to influence customer behavior and consolidate spending on a particular card," Ferguson said.
Other analysts said the bill, designed to thwart a wide range of so-called credit card company abuses, would drive banks to reinstate annual fees and curtail rewards, as they turn to their better disciplined customers -- who pay bills on time -- to make up for revenues lost with the stricter laws.
The bill mandates companies notify borrowers 45 days before raising interest rates and applying payments to the debt with the highest interest rates first. Bills also need to be sent at least 21 days before the due date.
Companies must also ask a borrowers' permission before approving a purchase that exceeds the borrowers' credit limit, a practice that often comes with a steep penalty fee, the Times said.
Copyright 2009 by United Press International.
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