Credit Card Reform Act – How To Capitalize And Eliminate Credit Card Debt

The first question that is bound to come up is 'what is the credit card reform act'

. In the May of 2009, United States President, Barack Obama, requested the Congress to pass an enactment that would improve the status of accountability in the credit creation sector. The main field of business that was to be affected by this act was that of credit cards. The actual name of the act is Credit Card Accountability Responsibility and Disclosure Act, 2009 and its genesis lies in the Bill 90 - 5 of the Senate, and bill 361 - 64 of the House of Representatives. Though the enactment, Credit Card Reform Act of 2009, was passed in 20th of May 2009, it was enforced in February of 2010.

Credit Card Reform Act of 2009: Principles

There are a number of principles that characterize the act, in order to fulfill its objectives. The main principle of this act is consumer protection and public accountancy. The act makes significant compliance in credit card processing and aims at banning all unfair and consumer unfriendly practices that are imposed by credit creators. The credit card companies, as a consequence, are required to maintain a policy of clear and simple disclosures. The advantage of such disclosures would make consumers aware of the policies and charges that are imposed by the credit card companies. The concluding effect of such reforms would be that consumers who use credit cards would know what they are exactly paying as an interest APR, charge and fee. This enhanced transparency in the structure of fees is further aided by the compliance of notice periods. The charges and terms and conditions of the credit card can be changed by the credit card companies at any given point of time. To eliminate the problems of consumers, regarding the rise of rates, the act creates a compliance, in accordance of which the service provider has to notify the card holder about the rise in rate, prior to the billing cycle. Furthermore the compliance regarding the credit provided to the student community has been changed with a view to protect the youngsters from dire and unnecessary consequences of credit card debt.

Credit Card Reform Act of 2009: Features and Provisions

There are some important features of this act that every consumer should know, they go as follows

Credit card companies are not permitted to raise the interest rate in the first service year. In addition to that, the company can hike the cost of credit, only if the payment of the bill is 60 days late. Upon the addition of interest rate, the account is to be reviewed, and in cases where the payment for last 6 months has been on time, the original lower rate of interest is to be levied. In accordance with the new legislation, the credit card company must intimate a notice of 45 days, before the interest rate is increased.

Some essential changes regarding billing cycle have also been implemented. The first genuine change is the ban on double billing procedures. The interest levied upon a single bill plus, differential interest rates and APR's must be disclosed properly in the monthly bill. The statement and the said bill is to be mailed 21 days before the payment is due. In addition to that, charges for payments over Internet or cell phones are to be abolished. Thus, you will have to tally these changes with your own credit card service and check how it will be affected by the Credit Card Reform Act. Debt settlement would also become an easier option, owing to the transparency of billing.

There are however certain, credit card reform act of 2009, limits which are being experienced by credit card companies. Two drawbacks affecting the entire industry include the elimination of grace periods and revision in annual fees. I hope that the elaboration on Credit Card Reform Act of 2009 was satisfactory. Good Luck!

Credit Card Reform Act How To Capitalize And Eliminate Credit Card Debt

By: archerfraizer

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