New Credit Card Laws for 2009
If you’ve been keeping up with the latest personal finance news these days, you may have heard that Congress passed a new set of credit card laws in May of 2009. Specifically, on May22, 2009 the President signed the Credit CARD Act of 2009 into law. The all capital letters in CARD signifies that this is an acronym standing for “Card Accountability Responsibility and Disclosure”. Here is just a sampling of the more interesting provisions:
- Restricts “bait and switch” interest rate practices, by requiring introductory rates to last at least six months and otherwise prohibiting interest rate increases in the first year of the account.
- Places other limits on interest rate increases without proper notice to consumers.
- Reigns in “over the limit fees” and fees for certain convenience payments.
- Places limitations on supplying credit cards to young people under 21 years old with consent of their parent or guardian.
- Prohibiting the heavy-handed practice of double-cycle billing (also called two-cycle billing).
- Requires the creditor to provide an estimate on how long the total debt will take to repay if only minimum payments are made.
- Requires bills to be sent at least 21 days prior to the due date, and eliminates some of the funny due date practices (i.e., due by 6 a.m. on the due date, but mail comes at 9 a.m. so really had to pay by day before, etc.).
- Notably, requires payments to be first applied to those charges bearing the highest interest rates — now most cards apply payments to the lowest interest rates first, so they get to keep charging the higher rates longer.
One down-side for consumers is that the new Credit CARD Act does not become effective until July 1, 2010. So, there is some speculation in the blogsphere that we may see a version of “Credit Card Companies Gone Wild” in the interim — as credit card issuers make a last grab at your wallets before the new credit card laws go into effect.
You may want to be on the lookout for amendments being mailed in your credit card statements that raise fees or lower your grace period to 20 days, etc. Also, you may want to consider opening additional credit accounts, so that if any one of your creditors starts to get too agressive, you can switch to the other account — or at least use that possibility as leverage with your current credit card company.
As we’ve seen in the past, there seems to be no limit to the creativity these companies have when it comes to finding a way to get more money out of their customers. So, keep your eye on those pamphlets of legalese in your statements.Tags: Credit CARD Act of 2009, latest personal finance news, new credit card laws for 2009