How they affect you.
The new Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD) law, which is designed to protect consumers from unfair credit practices, generally takes effect on February 22, 2010. Here’s a summary of several key provisions.
-Introductory rates offered by credit card companies must remain in effect for at least one year (six months for promotional offers). Consumers must receive at least 45 days’ notice (instead of the current 15 days) before a rate hike. (This provision became effective August 20, 2009.)
-The ‘double-cycle billing’, the practice of basing finance charges on both the current and previous balance is eliminated by this law.
-The credit card companies will have to get cardholder’s permission to process transactions above their personal limit thereby reducing “over-the-limit” fees.
-The CC Companies will be required to mail credit card statements at least 21 days before the due date (seven days longer than before).
-Unless the consumer is late to make the monthly payments by 60 days or more credit card companies can’t raise rates on an existing balance.
-Credit card payments will be applied to debt with the highest interest first. Currently, companies do the opposite.
-Consumers must be notified how long it will take and how much it will cost to eliminate debt through minimum monthly payments.
-Applicants under age 21 won’t qualify for a credit card without showing the ability to pay or a co-signer.
-Plain Language in Plain Sight: Creditors will give consumers clear disclosures of account terms before consumers open an account, and clear statements of the activity on consumers’ accounts afterwards
-Real Information about the Financial Consequences of Decisions: Issuers will be required to show the consequences to consumers of their credit decisions.
- Issuers will need to display on periodic statements how long it would take to pay off the existing balance – and the total interest cost – if the consumer paid only the minimum due.
- Issuers will also have to display the payment amount and total interest cost to pay off the existing balance in 36 months
For more information check this white house press release.
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“Get wisdom, get true knowledge; keep it in memory, do not be turned away from the words of my mouth.”(Proverbs 4:5)
Most people don’t realize that congress was paid off by the credit card companies to change the bankruptcy laws in 2005 in the card companies favor. First time they were changed in 27 years. Yes congress was bribed. Now they are passing laws pretending they are fixing things? Ironic isn’t it?