Credit Card Consumers’ Bill of Rights goes into effect
OnlineGuideTo.com — The first phase of the credit card consumer protection act went into effect Thursday.
The Credit Card Accountability Responsibility and Disclosure Act (CARD) is a credit cardholders’ Bill of Right that prohibits various tricks and traps until now used by the credit card industry — including hidden interest rate hikes and exorbitant fees.
When interest rates rise, credit card issuers will now have to give their customers at least 45 days notice, instead of 15 days prior to the CARD act. This gives credit card users more than a month to shop around for another card with better terms.
The card issuers must also allow customers to opt out of the higher interest rate, giving customers the right to cancel their account while paying off any balance under the old, lower interest rate.
Banks are now also required to mail statements at least 21 days before payment-due dates — a week longer than before. Previously, card companies were able to collect lots of late fees by narrowing the gap between the billing- and payment due dates.
Additional provisions
Additional provisions of the Credit CARD Act will take effect on February 22, while other measures will kick in on Aug. 22, 2010.
• The February changes include a ban on “any time, any reason” rate increases on existing balances.
• More mandatory disclosures, such as how long it will take to pay your balance is you make only the minimum payments.
• Credit card issuers will have to apply your payments to the highest-interest balances first. Currently they are first applied to the lowest interest balances.
• Limits on the ways cards are marketed to people under 21 years of age.
