February 26, 2010
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News: Maybe This Isn't Such A Bad Thing After All
Well the new credit card act went into effect this week. The new law was designed to protect cardholders from the deceptive and unfair practices that the financial industry has participated in over the past few years. Many Americans blame the financial industry on the Wall Street breakdown and one of the worse recessions that the nation has seen in decades. The recession wasn't limited to the United States; nearly every country across the globe has dealt with the burden of a fragile economy and high unemployment. Despite the good intentions of many lawmakers in drafting a law to protect credit card holders, popular opinion is that the final act is really a tribute to the financial industry. The following highlights just a few provision of the new credit CARD Act. Cardholders can expect to see increased fees to replace the billions lenders say they will lose complying with the new law.
• Lenders must send out credit card statements at least 21 days prior to the due date.
• Cardholders will be given the opportunity to "Opt out" of changes in the card's terms and conditions which include interest increases and added fees such as annual service charges.
• Lenders must get the cardholder's permission before increasing credit limits or allowing over-the-limit transactions.
• Lenders are prohibited from raising interest rates on cardholders for risk purposes.
• Lenders must provide 45 days notice prior to any interest increase.
• If a lender raises the interest rate due to payment delinquencies, the account must be reviewed in six months and the lower interest rate restored if the cardholder was not late during the six month period.
• Lenders must apply any payment over the minimum amount to the highest bearing credit card interest rate.
• Individuals under the age of 21 must have a co-signer or proof that he/she can repay the debt.
• Credit card companies are prohibited from marketing cards on college and university campuses.
These, along with other provisions, will make it more difficult for less than prime borrowers to get a credit card as lenders become more particular about who they lend to..