Understanding the New Credit Card Law
Provisions of the CARD Act that Protect Card Holders
There is no doubt that the country is in a credit crisis unlike any in years. Many wonder how anything positive can come out of so many lost homes and jobs. However, the upcoming credit card law may just add a silver lining to a gray cloud for struggling credit card holders.
What is the New Credit Card Law?
The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act is the official name given to the credit card law designed to place restrictions and mandates on credit card companies. The act will officially go into effect in February of 2010.
What the Law Means to Interest Rates
One major troubling factor for credit card holders is interest rates. With high interest rates, credit card bills seem impossible to ever pay off in full. Most card holders only meet their minimum payments on their credit cards. According to the law going into effect in the early months of 2010, credit card companies cannot raise the interest rate on credit cards during the first 12 months. Special promotional rates offered by numerous credit card companies must stay in effect for at least 6 months.
The Law and Term Changes
It has been a major shock to many to open their mail and see that their credit card terms have drastically changed making payments harder to meet. The new law calls that by September, companies can no longer change the interest rate on a card without giving the card holder 45 days of notice prior to the change.
The CARD Act Eliminates Sudden Changes
Many card holders have been placed under the knife when they discover that their payment late by 2 days caused a major increase in their credit card interest rate. According to new law, interest rates may only increase if the payment 60 days or more late. If it does increase and the card holder pays the bill on time for 6 months, the rate drops back down to the original interest rate.
Credit Card Law Calls for Easier Bill Reading
Many believe that credit card bills are so jumbled that consumers do not even know what they are paying or realize how long it will take them to pay off their debt. Under the new CARD act, credit card companies must provide clearer billing. On the bill, card holders will see how long it will take to pay off their debt at the minimum payment rate along with the amount of interest that they are charged over that amount of time. This will hopefully act as a sense of reality for some.
No More Kids with Cards
Minors will no longer be able to have their own credit cards. Even college students will need a parent co-signer on their card application.
How the CARD Act Helps Card Holders
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