Tell Me About The New Credit Card Laws

In the last couple of weeks, I've had friends, family and clients ask me about the new credit card laws and what I thought about it. My response was-------------. Being in the business of credit repair and restoration, I should have been up to date with all of this stuff, without fail I did some research and some online reading. So, for you folks interested in what's new with the Credit Card Law, here it is.

Most of the major reforms of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act that President Obama signed into law last May of last year, does give consumers added protections.

Here's a look at the key changes:

1. Billing practices

Payments will be due at the same time each month, with notification of the bill made at least 21 days in advance of its due date. Payments will be applied to highest interest-rate balances first so that customers can pay off their balances quicker and more cheaply. Finally, credit-card companies will use simple and plain english on all their documentation/materials/statements that are related to the account and periodically show how long it would take consumers to pay off their existing balance and interest charges if they paid only the minimum due.

2. Interest-rate reform

All interest-rate increases on outstanding balances will be prohibited and card companies must notify the credit card holder 45 days in advance of an interest-rate increase hike. Moreover, there cannot be any interest rate increases for the first year any account is open.

3. Overdraft and over-limit protections

Credit Card holders now will to opt-in to a overdraft program instead of being automatically enrolled - at least the customers now have an option. Well, at my bank, I was asked if I wanted to participate in the overdraft program for a fee. With this new opt-in feature, if you try to make a purchase that exceeds your limit or overdrawn debit account, your card will simply be DECLINED- Yes, you will be declined and embarrassed. Under the old rules, the transaction could go through and the consumer would have to pay a fine. This option works to your advantage to avoid any derogatory records on your Credit Score.

4. Protections for the Young folks

Those under 21 will have to prove that they can pay off their card limits or have a cosigner before they can be granted a card.

Caution: For those parents who want to co-sign, I would not recommend doing this. Let me explain, if you as a parent fail to make a monthly payment, and visa-versa, you are both jeopardizing your credit scores.

THE REAL TRUTH IS

Credit card companies seeing the law coming into effect, have already cut credit limits, closed accounts, and increased rates in anticipation of the changes. When the laws go into effect this will be much harder to do. So basically the new law having a preset start date has given the credit card companies the room to pre load the risk. So we can only wait and see what happens......

Guide To Credit Card ACT 2009

Low Interest Credit Cards