More Americans may use payday loans to meet their short term financial needs if proposed credit card reforms are enacted this week.

The Federal Reserve votes Thursday on proposals that would affect the way consumers and credit card companies deal with each other. Among the five proposals is a ban on sudden changes in the interest rate for an existing balance, as well as a ban on "two cycle" billing practices.

"Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs," said Federal Reserve chairman Ben Bernanke this spring when the reforms were unveiled.

According to the Associated Press, one of the proposed reforms would make it difficult for subprime credit companies to continue doing business with about 70 million Americans who have "challenged credit."

One alternative for these affected consumers would be payday loans, Greg Tickner, the owner of a subprime credit card company that plans to adapt to the new policies, told the AP.

According to consumeraffairs.com, some 10 million Americans use payday loans each year, with an average loan request of about $300 each.
http://www.consumeraffairs.com/news04/2008/12/payday_bankruptcy.html
http://www.federalreserve.gov/newsevents/press/bcreg/20080502a.htm
http://www.google.com/hostednews/ap/article/ALeqM5h0zsZMFyHhVSxVYfcgTexlKhvMYQD952BRRG0

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