The CARD act (Credit Card Accountability Responsibility and Disclosure) of 2009 is supposed to help consumers, protect them for bad practices and keep the credit card companies in line. The credit card companies are anticipating the quick Feb 22, 2010 effective date. You may have already seen effects of this, but… How will this affect you.
Lower Credit Lines
Credit card companies have already lowered millions of customers credit limits, not only to protect them from higher risk, but because the CARD act allows for the customer to have a fixed limit that cannot be exceeded.
Banks are charging an inactivity fee for customers that don’t use their card, this also includes cards that have no balance on them. Also known as a dormancy fee.
Increased annual fees, late fees and interest rates
Because the CARD act states that a credit card cannot raise interest rates in the first year a card is opened, and must give a 45 day notice of a rate increase, along with the right to cancel. Credit card companies are increasing fees and interest rates now, before the law goes into effect. One thing the CARD act of 2009 does not include is a cap on interest or fees. Banks are also adding fees like a “printed statement fee” for consumers that receive their statements in the mail vs online or electronically.
These changes seem to impact the consumer negatively, which so far it has, and has been shown to have happened in the past, (ie Australia). However, there are some good that will come out of this.
- You will have the same payment due date every month, which if it falls on a holiday, they extend this to the next business day, this was done to avoid due dates falling on weekends or holidays.
- Credit card companies must mail out statements 21 days in advance (currently the mimimum is 14 days)
- You have the right to cancel any interest rate hikes, and keep the terms prior to the hike, to pay back your balance. You get 3 billing cycles to decide if you want to cancel.
- Credit card companies cannot raise rates, to customers in good standing that are unrelated to the cardholders behavior (gets rid of the “universal default”)
Remember to review the card act, anytime you think something doesn’t seem right with your credit card. If you receive a fee, or charge, it may be protected after Feb 22, 2010.
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