New Credit Card Law Changes

Recent legislature signed by President Obama provides some protection for consumers who carry credit card balances. The Credit Card Accountability, Responsibility, and Disclosure Act, also known as the Credit CARD Act of 2009 provides certain provisions that end some of the flagrant practices of card issuers. It improves consumer disclosures and caps interest rates and fees that are getting Americans into deeper debt.

Major benefits of the Credit CARD act of 2009 include more advanced notices on rate hikes. Card issuers must now provide a 45 day notice as opposed to the previous 15 day heads up. Plus, consumers are being given more time to pay their balances, as card companies must now send statements a minimum of 21 days before the payment is due. The Credit CARD Act additionally puts an end to double cycle billing and stipulates that all above-the-minimum payments will first be applied to the card balance with the highest interest rate. Overall, it prevents the credit card companies from taking every advantage in their favor.

New interest rate provisions restrict when and how a card issues can spike an interest rate. They make it illegal for a credit card company to bump up a rate due to late payments of less than 60 days. Plus, set a general rule against rates being increased within the first 12 months of card issuance, unless previously stated as part of the introductory offer. Another part of this legislature that will largely benefit consumers is the fee restrictions that clearly state that no over the limit fees can be charged by a credit card company, unless the consumer has elected to have the creditor approve over the limit transactions. In this case, no more than one fee can be charged per billing cycle.

Additionally, the Credit CARD Act of 2009 restricts card issuance to students. It prohibits the approval of anyone under the age of 21, without an independent means of income or a co-signer. Plus, the act offers some protection on gift cards, prohibiting their early expiration's and providing some restrictions against egregious usage fees and inactivity fees. All together, this new legislature is designed to keep credit issuers who take advantage at bay, while offering some relief to those who struggle with debt in today's challenging economy.