On May 22nd of 2009, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 in hopes to end practices that many have labeled as abusive by the credit card industry. The act aims to protect consumers from sudden rate hikes, hidden fees and other questionable practices.
The first of the reforms in the act went to effect last Thursday. Banks are now required to give consumers at least 45 days of warning before increasing someone’s interest rate, rather than the 15 days that they were required to give before. Consumers are also now given the opportunity to opt out of rate increases by closing their account and paying off the balance at their current rate.
Credit Card and home equity loan statements now must be mailed to borrowers at least 21 days before the due date. Previously the law required that banks sent out statements 14 days before the due-date of the payment. This move is in-responsive to a controversial practice that some unscrupulous credit card companies were using of delaying sending out statements in hopes that consumers would pay their bills late and generate late fees.
The next set of provisions from the Credit CARD act will take effect February 22nd of 2010. Specifically, new regulations will be put in place in regards to student credit cards, over-the-limit transactions, and interest rate increases. The final set of provisions will take place on August 22nd of 2010, which will regulate the charges and fees that credit card companies can charge consumers.
