New Card Legislation to Be Enforced Early

Just in time for the holiday season in 2009, the House Financial Services Committee has voted to speed up and enforced the new card legislation with passage of early with tough new credit card rules, the Credit Card Accountability Responsibility and Disclosure (CARD) Act.  This would bring forward the mid-February 2010 enactment to December of this year. Some say that the lenders have abused the fifteen month grace period by jacking rates and gouging customers to further bolster their earnings before the rules are scheduled to take place. The new rules which will bring reform to forefront such as limits on late fees, interest rates for late payments and allowable methods to market credit cards to college students were approved earlier this year.

There are some concerns that the new laws can only address existing fees and business practices.  This means that card companies may have initiative to create new fees with different names.  To prevent this from happening, the House Financial Services Committee has proposed a new regulatory body, the Consumer Financial Protection Agency.

CARD Act Highlights

Other highlights of the bill include an “opt-in” for over the limit use of your card.  The legislation empowers the consumers by not allowing clients to make transactions that would produce “over the limit” charges.  If this occurs, the customer will have to request that the company charge then the “over the limit” fee.

• Double-cycle billing is banned.  The double-cycle billing method creditors use to compute interest charges is one of the most abusive ways the credit companies can compute your charges.  This practice charges interest on the current balance as well as the balance you owe on your previous month.

• At the moment credit card companies have had the luxury of being able to adjust, meaning raise, the interest rate after you have signed the contract with them.  Under the new legislation the interest rate must remain the same for the first year of opening the card. This prevents the company from automatically raising the rates unless it was disclosed at the time of sign up.  Promotional rates however, must last at least 6 months.

• When raising the card interest rate, the credit company must give a 45 day notice that the rate is increasing.  This is much more conservative than the existing time for notice which is 15 days.

• If your card issuer raises your interest rate, the rate will only apply to the new balances.  The existing balance will remain subject to the initial rate.  If you are 60 days late in payment then the amounts are able to be charged at the new rate.

• When making your payments to balances with different rates, the new rules require banks to pay the highest interest balance first.  This reduces the finance charges on your account.

• Paying your bill is now easier because card issuers will have to accept payment through the internet, traditional mail, and telephone without charging any fees.

Credit Card Tactics

The holiday shopping season is already started and some consumers may be caught unawares with the hard line policies employed by some credit card companies.    Some of the tactics employed include:

• Sudden lowering of your credit limit
• Jacking up interest rate even if you have no outstanding balance
• New or higher annual fees
• Higher fees for balance transfers and cash advances
• Cancelling cards for no reasons.

With the news of the new act being instituted some customers were shocked to see that their former ‘no-fee’ card would now be subject to a newly instituted annual fee.

What Can You Do?

The easiest thing to do is to shop around for a better deal and to pay off your outstanding balance as quickly.

Related Posts:

• CARD Legislation Goes Into Effect February 22, 2010 - President Obama recently signed the CARD Act (Card Accountability, Responsibility, and Disclosure) Legislation which calls for better behavior on the part of...
• Consumers Face Higher Fees and Penalties for Cards Despite Legislation - Even with the new credit card reform legislation in place there are still creases that need to be ironed out. The Federal...
• New Card Legislation Does Not Protect Business Card Holders or Returning Military - The new credit card protections for consumers are on the way come July 1, 2010 –  helping protect consumers from double-cycle billing,...
• How New Card Legislation Will Effect College Students - College students will find it more difficult to get a credit card once President Obama’s new card legislation, the Credit Card Accountability,...

This entry was posted on Tuesday, November 10th, 2009 at 9:00 am and is filed under Credit Card News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.