Credit Card Reform Has Taken Effect

Monday, Feb. 22, 2010 officially marked the day the Credit CARD Act would take effect. But now that the new law has taken effect, will it make a difference? It’s important that you understand the act, what rights you have and how it could affect your relationship with your credit card company.

What’s the Credit CARD Act?

If you’re unfamiliar with the Credit CARD Act (also known as the Credit Card Accountability Responsibility and Disclosure Act or Credit Card Bill of Rights) then you’ve been missing out on nearly a year of updated information regarding the future of transaction fees, interest rates, penalties and more related to your credit card.

The act was an attempt by President Barack Obama to put a stop to the abusive nature of the credit card industry. In general, he no longer wanted companies to be able to adjust credit limits, increase interest and impose penalties without warning or for no reason at all. By getting the bill into motion, Obama hoped to provide consumers with much-deserved credit relief.

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What to Expect from the Act

A few general changes that have now taken effect with the new bill include adjustments to:

Interest Rates

• A credit card’s interest rate can’t be increased within the first year.
• The credit card company must inform a consumer 45 days before increasing the rate, change a fee or making any other significant adjustments.
• If the company wants to adjust your rate (or make other changes) and you want to cancel your card as a result, you can do so before the adjustments take effect.

Late Payments/Penalties

• If you are 60 days late on a payment, the issuer may impose a higher penalty as long as you are provided a notice that is “clear and conspicuous.”

Fees

• Companies are now required to obtain permission from the consumer before charging fees for transactions that exceed the credit limit.
• If the consumer does decide to grant permission, the company can only impose the fee once per billing cycle

Payment Dates

• The consumer must be mailed or delivered the credit card bill at least 21 days before payment is due.

This is just a short list of what will be affected by the Credit CARD Act. There is much more that goes into the act.

The good news is that with more communication with your credit card company, hopefully the relationship will improve and you will be given more rights as a consumer. But we will just have to see how interest rates, penalties, limits and more will really be affected in the months to come.