The first phase of the new Credit Card Laws kicked in Aug. 20, 2009, when consumers began receiving at least 45 days' advance notice of changes to their accounts and gained the right to opt out of significant changes. They were also guaranteed at least 21 days to pay their monthly credit card bills.
The second phase of the new Credit Card laws, which started on 22 February 2010, contains the bulk of the consumer protections.
Among other things, the new law will:
- Restrict issuing and marketing credit cards to people under 21 unless able to show proof can repay the credit card bill by themself or have someone over 21 co-sign on the account
- Ban universal default, a practice of raising interest rates on card accounts based on the user's payment history with another, unrelated creditor but the ban applies only to existing card balances.
- Require that payment due dates are the same date each month to help consumers avoid late fees.
- Ban over-limit fees unless cardholders agree, in advance, to have over-limit protection on their accounts.
- Ban double-cycle billing. Finance charges cannot be carried over more than one billing cycle
- Make it easier for those who get into trouble with credit to get help. All monthly statements must now contain a toll-free number consumers can call to get contact information for at least three nonprofit credit counseling agencies.
Impact of the new ruling.
- Higher credit card interest rates and more fees but some of the lost income will be offset by new fees many credit card companies are initiating and from lower charge-offs as the economy continues to recover and more people go back to work.
- The new law will save consumers at least $10 billion a year from just two of the provisions -- the ban on retroactive interest-rate hikes and the end of "hair-trigger" penalty rate increases
- Better disclosure, simpler terms and restrictions of how fast rate increases can occur
This article was reported by Connie Prater for CreditCards.com.
