The first phase of the credit card legislation passed in May begins this week; will the new credit card legislation affect you? Known as The Credit Card Accountability, Responsibility, and Disclosure Act, the bill was intended to be a credit cardholder’s Bill of Rights; and I have highlighted some of the more important provisions below:
Banks are now required to mail credit card bills at least 21 days prior to the due date and must provide at least 45 days notice before making major adjustments in interest rates or fees. They are also prohibited from raising interest or fees without warning to those customers who miss payments or exceed their credit limit.
The legislation also allows credit card customers who receive notice of increases in rates or fees to decline those adjustments and to continue to pay off the balance under the original terms as long as no further charges are made. Banks and card issuers will no longer be able to retroactively raise interest rates, a practice that fattened their coffers while condemning cardholders to years of servitude.
With the majority of the bill’s provisions not taking place until February 2010, banks have recently scrambled to make adjustments prior to the legislation taking effect. By cancelling thousands of accounts, reducing the credit limits of others, and making rate adjustments, card issuers have fought to protect this valuable source of income.
Of course the banks now proclaim that the new law hurts consumers, a concern they seemed to have lacked for decades; and their recent actions demonstrate their true intentions and concerns. Ultimately, consumers will benefit; and if credit cards become somewhat more difficult to acquire, that too only serves to help both consumers and the overall economy.
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