New Credit Card Law, its Impact and Implications

New Credit Card Law, its Impact and Implications

What are the implications of the new credit card law? If you are one of several millions of people who love using their plastic cards but do not have the same feelings when it comes to paying the high interest rates, it will be to your best interest to learn the impact of the new law known as the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 which went into effect last Feb.22, 2010. This reform law contains several consumer protection provisions designed to curb many unfair card issuer practices.

When you study the law, you will recognize that many card users will have more time to pay their monthly bills and can avoid retroactive interest rate increases on their existing card balances. There are other significant changes. For one, If you do not favor the new terms or the fine print of the application or membership contract, the law gives you the privilege to scout for better terms with another card company.

Card companies are also being obliged to disclose vital information that card members should know. But because of the fine print in credit card agreements, customers do not make it a habit to go out of their way to use a magnifying glass to scan and go over the details of the agreement.

There are many salient features of the new law: First, is the Limited interest rate hikes. This means that hikes in interest rates are conditionally allowed. Substantial changes cannot be enforced without 45 days' advance notice to their subscribers. Another feature is the Right to Opt out. Members can now opt out if they do not accept the changes in the terms. Opting out means members can pay their old balance in five years time and closing their old account. Other features are the limited universal default, limited credit to young adults under 21, more time to pay monthly bills, clearer due dates and times, higher interest balances paid first, limits on over-limit fees and no more double-cycling billing, minimum payments and terms about subprime credit cards for people with bad credit, late fee restrictions and gift cards. Although the new credit card law came up with remarkable card reform provisions, users of this type of card must understand that the Law does not cover everything. The new credit card law is fair in the sense that it also protects the credit card issuers.

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