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Banks seem to be recovering from the financial crisis, but they now face irresponsible credit card holders who do not pay off their debt. Under new federal rules, lenders can not charge card customers for missing one payment or having exceeded credit limits. However, consumers now owe $21 billion dollars in home equity lines of credit that they borrowed to pay off credit cards, buy new cars, or even make payments on the very home that anchored the loan. The government also banned programs that charge for overdraft protection. Lenders now have to get customers' permission to pay bounced checks. This new policy could cost Bank of America $200 million and Wells Fargo $300 million. Commercial real estate is another hazard. Banks own about $1.8 trillion in commercial real estate loans. The danger is, some borrowers with debt over their property's value just leave their homes for the banks to sell. Some banks are even cutting deals with property owners who are unlikely to repay.

Banks are also facing a problem with college students and their credit cards.

A new law has been signed that outlaws some of credit card company's most contentious billing practices. It states that must provide a 45 day warning before jacking up rates. Another new law is that a student's co-signer must approve a sudden rate increase. Something the law doesn't take care of the affinity-card contracts which encourages colleges and universities to sell students' contact information to credit card companies. E-mail addresses and contact information from the students of the University of Michigan are worth $25.5 million. Credit card companies are giving credit cards to undergraduates that don't even have a job. College students are one of the reasons that the credit card debt problem got so bad.

The college students could solve their problems by using debit cards.

There are positive and negative aspects to using a debit card. One positive aspect is that debit cards extract the money directly from your bank account at the time of purchase, therefore you can not charge a purchase if there is no money in your account. This would eliminate any service and finance charges. Another positive would be the fact that you have instant access to your money. Debit cards are also accepted worldwide. One negative aspect would be if you are short on money you may not have enough cash left in your account to feed your family. Another factor that may dissuade you from using a debit card would be the risks involving hackers. If a hacker accesses your debit card information you could be liable for charges that you did not warrant. Also, if your debit card or number is stolen, your bank account could be depleted. Credit cards allow you to keep your money in your account until you receive your bill. Usually, credit cards come with "perks" such as frequent flyer miles, "cash back", etc. With a credit card, if a hacker gets your information, there are more strict laws to protect the consumer. The downside to credit card use is if you cannot pay your bill in full, you will owe not only the amount that you charged, but also service fees and exorbitant finance charges.

These factors all have a major impact on the financial crisis.

Works Cited

Francis, Theo. “WHAT LURKS ON THE BOOKS OF BANKS.” __Business Week__ Dec. 2009:14.

p30-31. MAS Ultra. 17 Mar. 2010 <[|http://web.ebscohost.com]>

Goldwasser, Joan. “The Downside of Debit Cards.” __Kiplinger's Personal Finance__ Nov. 2009.p67-67.

MAS Ultra. 17 Mar. 2010 <[|http://web.ebscohost.com]>

Silver-Greensburg, Jessica. “New Rules for College Credit Cards.” __BusinessWeek Online__ June

2009:25. p3-3. MAS Ultra. 17 Mar. 2010 <[|http://web.ebscohost.com]>