subject: Credit-card Reform Takes Effect [print this page] The concluding batch of rules in terminal year's Union credit-card redevelopment took effect this calendar week. As the reforms take hold, some in the industry warn about negative upshots while supporters herald protections in the law.
The novel credit card law admits these consumer protections :.
* Bounds all interest rate steps up during the first year.
* Cuts back rate of interest increments on being balances.
* Increases notice for rate increment on future purchases.
* Preserves the power to pay off on the old conditions.
* Commands just application of defrayments.
* Puts up sensible due dates and time to pay.
* Protects young consumers.
* Curbs issuing fees on fee harvester cards.
* Expects enhanced revealings.
* Places limits on fees and punishment interest.
* Requires depository financial institutions to brush up rate increase every six calendar months.
* Founds gift card protections.
"College students will no longer get a card simply because they're respiring, which was the old test," said Ed Mierzwinski, a consumer-protection expert with the U.S. Public Interest Research Group in Washington, D.C.
Additionally, the ways banks solicit on college campuses has been curtailed ; recruiters can't give away food in exchange for credit-card applications, for instance. And merchandising agreements between credit-card companies and colleges must be exposed to the public, a reform Mierzwinski said stems from the University of Iowa's and University of Northern Iowa's move to deny state officials admission to credit-card contracts a couple of years ago.
Politicos have touted the CARD Act as enormously good to consumers. Iowa's Congressional mission overpoweringly backed up the legislation last year, with U.S. Rep. Steve King, R-Iowa, as the lone dissenter. In a release this week, President Obama said : "This law will also make the terms of credit cards more understandable and puts a stop to hidden over-the-limit fees and other practices designed to trap consumers." .
Nonetheless, lenders' power to impose high fees and rates on speculative accounts has mostly been restricted, a move big banks say could hurt consumers.
"People with good credit may have to pay more in order to enjoy the convenience and flexibility of credit. And if your credit history is poor, you may find it much harder to get credit," Bank of America officials said in a statement.
But at least one local institution hasn't seen those spectacular affects.
" Lots of it is going after fees that big banks were bearing down, and since we weren't genuinely doing any of those things, it doesn't have a fundamental impact on our income," said Jim Kelly, the senior vice president for selling at the UI Community Credit Union.
And despite steps in the law taking most consumers under age 21 to have a cosignatory, Kelly said approvals for the credit union's student-focused card -- which holds a relatively low fixed-rate and a low credit line -- are up 60 percent in the past year.
