August 24, 2010
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News: Final CARD Rules Become Effective
It's hard to believe that after talking about it for two years now, a large majority of cardholders are totally unaware of the sweeping new credit card reform legislation that was signed into law last year. President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 on May 22, 2009 which is aimed at establishing fair and transparent practices in the regard to revolving credit. The law provided lenders a whopping nine months to prepare for the new rules and regulations which would involve developing, printing, and reporting new card contracts terms and conditions. However, many of the lenders used that valuable time to conjure up new ways to stick it to the cardholder before the act became effective. After a number of benchmarks, the final rules became effective on August 22, 2010.
With these final rules, card issuers will now be restricted to the penalty amount if a credit cardholder is late paying his monthly payment due. The penalty charged can no longer exceed the amount of the minimum payment due. Previously, rules that restrict interest rate practices became effective on February 22, 2010. Additionally, credit card rules that became effective on Sunday also include a provision that prohibits lenders from canceling out gift card for at least five years from the date of the gift card purchase. Lenders are also prohibited from attaching more than one fee per month on gift card usage.
What Americans want to know is how are the credit card companies complying to the new rules and what penalty will be imposed if their lender does not comply with the law. According to a recent report by Pew Charitable Trusts, most of the card issuers are complying with the new rules and that cardholders are protected. The study did indicate, however, that some lenders have not done a sufficient job at disclosing the terms and conditions of the card contract pertaining to penalty interest rate increases and that the Federal Reserve needs to generate rules to govern the rules that apply.