November 26, 2009
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Senator Levin Addresses Feds, Pt.4
Time could be running out.Grace Period Rebates - New grace period rebates eliminate any guaranteed grace period and charges interest from the day the credit card transaction was made. The consumer is lead to believe that he will receive a rebate on a portion of the interest in the next billing cycle. There is no guarantee that the credit card company will actually provide the rebate because it is dependent on whether the consumer had a preexisting balance, whether the consumer's purchases exceeded a specified amount in previous months, and is prior interest charges were rebated. The notice contains complex terms making it difficult for consumers to understand and potentially abusive. Additionally, the program makes the grace period contingent on unpredictable factors. These programs also give credit card companies the ability to shorten grace periods making it difficult for cardholders to qualify for a rebate. Senator Levin asked that the final rules ban such programs.
45-Day Notice for Account Terminations - Credit card companies have been arbitrarily closing accounts and slashing credit limits without any previous notice to the cardholder leaving many of them without recourse. Although there may be circumstances that would justify such action, Levin and the Board recommend that consumers should receive a 45 day notice prior to an account closing.
Effective Date - The CARD Act applies to all credit card accounts not just accounts opened after the effective date. Recent requests to the Board to include existing accounts to “circumvent” certain provisions of the legislation should not be approved.
According to Senator Levin, it has been noted that since the CARD Act was signed into law in May, credit card companies have imposed a new set of unfair practices on consumers. The CARD Act was designed to prevent these practices and requests the Board strengthen the proposed rule that regulates the Act to prevent "evasions from undermining the law."