subject: The new credit card law does it solve any real issues? [print this page] The new credit card law does it solve any real issues?
On August 20, 2010 the credit card accountability, responsibility and disclosure also known as the Credit Card Act of 2009 goes into affect. The goal of the law is to safeguard consumers from unfair practices by banks and other credit card issuers. The questions is whether or not the law will have the impact anticipated. The law was put into affect in February 22,2010. This has give banks and credit card issuers plenty of opportunity to raise rates and modify other terms before the law became enforceable.. The law does not address the biggest problems consumers have which is excessive debt and it merely may be a government effort to quell public outcry over abusive tactics by these companies..
Here are the highlights of the new law:
Retroactive rate increases - Issuers can't raise interest rate unless promotional period has expired. . Borrowers cannot be punished for non-related accounts under universal default or due anytime, and any reason clauses. When a cardholder demonstrates that he has paid on time for the past 6 months, the issuer must reinstate the lower interest rate.
Notice of Rate Hike - establishes a 45 day period for key contract changes and rate hikes. This does not apply to credit card limit changes. The rules don't put a limit on interest rates. Your APR rate can still triple.
Fee Restrictions - Issuers cannot charge cardholders an overlimit fee unless they approve the transaction and over limit amount
. Restrict Credit Cards to under 21 - Students and other 21 must prove financial independence or have a co-signor over 21 to receive a credit card.
Double billing cycle - the practice were interest charges are based on current and preceding balances or double billing is terminated
Fairer payment allocation - int the current system payments are applied to lower interest balances than to the high one, the law reverses this procedure. More time to pay - The period in which the statement is received prior to payment is extended from 14 to 21 days.
Gift Card protections - a 5 minimum expiration of gift cards is mandated.
It can be argued that some protection to the consumer is afforded by this law, at the same time it can be said it does not do enough. Additionally, credit card companies have had plenty of opportunity to raise rate and other fees favorably prior to the law becoming enforceable. Therefore, the effect it will have will be subdued and credit card companies have position themselves well.
