Credit Card Holder Bill of Rights:
As the U.S. Economic climate continues to feel the effects of the credit crunch, congress has set forth new regulations for the Credit Card Industry and Credit Interest Rates overall. The new set of regulations is being widely hailed as a commonsense approach to expanding consumer protection laws without compromising the ability of the industry to remain profitable. The aim of the legislation was to ban certain practices of the credit card industry that for years have been seen as unseemly, and unfair to the consumer. Feeling the effects of the economy, personal credit card loans became a hot button issue during the financial crisis as lenders began slashing credit limits, and dropping customers.
CARD, also known as the Credit Card Accountability, Responsibility, and Disclosure Act passed quickly at the urging of President Obama who campaigned partly on a promise to reform the Credit Card Industry with the hope of preventing another bubble burst in the already dismal economy. The move is a tell tale sign that the Credit Card industry is no longer a peripheral aspect of the economy taking a back seat to home loans and the GDP (Gross Domestic Product) as the most significant drivers in the economy. Today, as more and more Americans become reliant on Credit Cards for day–to–day living, the outcomes of leaving the industry unchecked have risen to a level almost equal to the regulation of the securities industry.
Some studies show that the provisions in this bill are projects to save the American consumer $10 - $20 billion annually.
So what does the new law do for the average consumer?
Here are a few of the main items that will take effect as a result of this legislation:
• Retroactive rate increases: Credit card Companies will only be permitted to raise a person’s credit interest rate if the account is more than 60 days past due. Even then, the credit card interest rate increase can only be applied to new purchases made on the card. What’s more, if the card holder starts making payments on time and does so for six consecutive months the credit card company must return the credit interest rate back to the previous and lower rate.
• Notice of credit card interest rate hikes:Cardholders must be given 45 days advance notice prior to any credit interest rate increases on their credit cards.
• More time to pay bills: Credit card lenders are required to send statements a minimum of 21 days prior to the due date. Making a payment by 5 pm EST on the due date must be classified as an on time payment. Payments received by the credit card company on a day that they are closed or observing a holiday cannot be counted as late and charged late fees.
• Payments must first be applied to higher credit interest rate balances: It is becoming more common for consumers to have multiple credit card interest rates for different balances on the same credit card account. For example, some credit card companies offer a lower rate for balance transfers and a higher or regular rate for purchases.
• Ends universal default: Credit Card Company is not allowed to raise credit interest rates on a person just because they are late on a payment to another creditor.
• No more over-limit fees without permission: Issuers are required to get the cardholder’s consent before allowing a charge to go thru that would the account over its credit limit resulting in an over-limit fee.
• Young people: Consumers 18 years of age and under will only be allowed to receive a credit card if they are legally emancipated under state law or are added to an existing credit card account as a secondary cardholder to a parent or legal guardian’s. Also, college-age applicants’ will be limited to 20% of their annual income or $500, whichever is greater drastically reducing the possibility that a college age person will rack up huge dept that is impossible for them to pay-off due to extremely high credit interest rates.