“Credit CARD Reform Act of 2009″ – What’s It Mean To You?
This past spring Congress passed the “Credit CARD Reform Act of 2009″ to put an end to the dirty tricks trapping so many of us consumers in high-cost credit card debt.
A few Credit Card Protections went into effect in August 2009 but we are still waiting for most protections to start on February 22, 2010.
In the meantime, credit card companies and banks are raising rates and changing the terms of credit card contracts for millions of consumers.
Credit card interest rates rose an average of 20% in the past 2 quarters as credit card companies and banks rush to jack up rates before the new rules take effect next year.
- Has this happened to you?
- How has this lowering of your credit limits and these increases to your interest rates (and monthly payments) affected your life so far?
- How might it affect your Holidays this year?”
I’m curious to hear your opinion… Please share your thoughts below by leaving a comment.
Below is a summary of the “Credit CARD Act of 2009“…
Reading through all of the (positive) changes (coming soon), it became very disturbing to me to realize how much abuse has been taking place by these credit card companies. Helping people in financial hardship for the past eight years, pouring over my client’s credit card statements to find ways to get people out of debt, it’s becoming even more obvious to me that so much of the “hardship” people deep in debt are struggling with is not all their fault. It’s disgusting how much the credit card companies have gotten away with!
See for yourself how many dirty, sleazy tricks your creditors have been playing on you…
While much of the blame for the large amounts of high interest credit card debt you may be stuck in falls on your creditors, it’s only you who is now responsible to pay for the debt.
*** Beginning of Summary ***
“Credit Card Accountability Responsibility and Disclosure Act of 2009″
Effective Date
• Most of the new law will go into effect February 22, 2010.
• The 45 day notice requirement and the requirement that bills are sent 21 days before the due date went into effect August 20, 2009.
Restricts all interest rate increases during the first year
Stops credit card issuers from raising interest rates in the first year after a credit card account is opened, except:
• When the increase is under a variable interest rate.
• At the end of the promised time period for a promotional rate. For example, the issuer can
offer 3% for six months and then 12% after that. (The promotional period must be at least 6 months.)
• If the required minimum payment is not received within 60 days after the due date.
Restricts interest rate increases on existing balances
Credit card issuers cannot raise interest rates on existing balances unless:
• The increase is under a variable interest rate.
• It is the end of a promised time period for a promotional rate.
• The required minimum payment is not received within 60 days after the due date.
Increases notice for rate increase on future purchases
• After the first year, the card issuer can raise the rate on future purchases with 45 days notice. No notice is required for increases due to one of the reasons state above.
Preserves the ability to pay off on the old terms
Credit card issuers can’t change the terms for repaying a balance, except that the issuer may give the cardholder either:
• Five years to pay off the outstanding balance at the old rate; or
• An increased minimum payment that has no more than twice as much of a contribution to paying down the balance as the old minimum payment.
Places limits on fees and penalty interest
• If the interest rate increases because the minimum payment is not received within 60 days after the due date, the rate must go back to the original lower rate if the consumer makes on time minimum payments for 6 months.
• No over-the-limit fees may be charged unless the consumer has asked for the account to be set up to allow transactions which will exceed the credit limit.
• An over-the-limit fee may be imposed only once per billing cycle if the balance is above the credit limit on the last day of the billing cycle.
• No fees to make a payment except for expedited payments arranged through a service representative.
• A card issuer who increases the interest rate must review the account every 6 months and to decrease the rate if indicated by the review.
• Penalty fees (late fee, over-the-limit fee, etc.) must be reasonable and proportional to the omission or violation. The Federal Reserve Board must issue rules to set standards to decide what fee levels are reasonable, and it may set up “safe harbors” for acceptable fee levels.
• Two-cycle billing is prohibited. An issuer cannot reach back to an earlier billing cycle when calculating the amount of interest charged in the current cycle.
Requires issuers to consider consumer’s ability to pay
• Card issuers must consider the consumer’s ability to make the required payments under the credit card’s terms before raising limits or issuing a new card.
Requires fair application of payments
• Amounts in excess of the minimum payment must be applied to the highest interest rate, except in the last two months before a deferred interest balance is due.
Provides sensible due dates and time to pay
• Prohibits credit card issuers from setting early deadlines for payments. Payments must be received by 5:00pm at a location set by the issuer.
• Due dates will be on the same day each month.
• The rule prohibits card issuers from treating a payment as late unless the bill is mailed or delivered at least 21 days before the due date.
Protects young consumers
• Before issuing a card to a person under the age of 21, the card issuer must obtain an application which contains either:
o Signature of a cosigner over the age of 21, or
o Information indicating an independent means of repaying any credit extended.
• Card issuers may not raise the credit limit on accounts held by a person under the age of 21 who has a cosigner without written permission from the cosigner.
• No prescreened credit card offers to people under the age of 21 unless the consumer has consented to receive prescreened offers.
• Restricts card issuers from providing tangible gifts to students on campus in exchange for filling out a credit card application.
• Requires card issuers to disclose marketing contracts made with colleges.
Prevents deceptive marketing of credit reports
• Advertisements for free credit reports must disclose that free credit reports are available under Federal law at: AnnualCreditReport.com.
Restricts issuance fees on fee harvester cards
• Restricts issuers from financing fees and charges for opening a credit card where the fees and charges total more than 25% of the credit limit.
Requires enhanced disclosures
• Requires issuers to disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made.
• Requires 45 day written notice before the issuer can raise the APR or make any other significant change to the card agreement.
• Requires periodic statements to clearly state the required due date and late payment penalty.
• Credit card agreements will be posted online and the Federal Reserve Board must keep a public website providing them to the public.
Establishes gift card protections
• Gift cards cannot expire less than five years from the date the card was purchased or money was last added to the card, whichever is later.
• No fees if the card has been used within the past 12 months. If a card remains unused for 12 months, then there can be one fee a month.
• Stronger state laws continue to apply, including for both expiration dates and fees.
• The bill covers both retailer gift cards and prepaid general use gift cards (the ones that often are branded as Visa, American Express, MasterCard, or Discover.) The law does not cover rewards, loyalty, telephone or promotional cards and does not cover paper gift cards or paper gift certificates.
*** End of Summary ***
Crazy huh?
Can you believe what the credit card companies have gotten away with, and are STILL getting away with today, until February 22, 2010??
REMEMBER:
In the meantime, banks are raising rates and changing the terms of credit card contracts for millions of us…
Credit card interest rates rose an average of 20% in the past 2 quarters as credit card companies and banks rush to jack up rates before the new rules take effect next year.
QUESTIONS:
- Has this happened to you?
- How has this lowering of your credit limits and these increases to your interest rates (and monthly payments) affected your life so far?
- How might it affect your Holidays this year?”
I’m curious to hear your opinion about this, so please be sure to share your thoughts by leaving a comment below:
Here to Be an Asset to You,
Jesse Niesen
DebtGOTOGuy.com
Debt Relief Guide Online
FastTrack Consulting, Inc.
888-928-DEBT (3328)
Great summary of the provisions of the law. In my personal case:
Has this happened to you? NO
How has this lowering of your credit limits and these increases to your interest rates (and monthly payments) affected your life so far? My limits have not been lowered and since I pay my balances in full every month rates have not affected me.
How might it affect your Holidays this year? My status of being in search will have more affect that anyhting that the credit card companies have or will do.