Commonly known as the Credit Card Act of 2009, its official title is the Credit Card Accountability, Responsibility and Disclosure Act of 2009, the Act is to be phased in three phase with the first going into effect today. This Act was established to protect consumers from the credit card issuers’ practices of increasing rates and fees.
For years the credit card companies have been able to write their own terms with very little notice and there was very little the consumer could do about it. In May of 2009, President Obama signed in the Credit Card Act of 2009 to give the consumer more protection and more say in their dealings with the credit card issuers.
The Act will be implemented in three phases starting today and the last phase is to go into effect in August 2010. While the meat of the Act does not go into effect until next year, there are some important changes as of today with how the credit card companies notify their users of changes.
As of today, the Credit Card Act of 2009 requires credit card companies to must now notify a cardholder 45 days before any change such as a rate or fee increase occurs. In the past they only had to give 15 days notice.
The credit card companies must now mail out the credit card bill so that the cardholder receives the bill 21 days before the due date. This is an increase from the 14 days in the past and is designed to allow for postal delivery times. The shorter mailing period and delays in the mail service often resulted in late payment fees.
Another key change due to the Credit Cart Act is that cardholders now have the option to opt out of a rate increase. When a cardholder is notified of a rate increase, the cardholder now has the ability to freeze their rate at the current rate and not accept the increase rate. By doing this though, the card will closed to future charges and the cardholder must pay off the card in five years.
The next two phases of the Credit Card Act of 2009 will actually occur in 2010. Phase two is schedule to go into effect on February 22nd of next year and will give consumers more protection in regards to terms, rates and fees. Applicants under 21 will also have more restrictions on if they can be approved for a credit card.
The big change in phase two will be on rate increases. Starting with phase two of the Act, rate increases can only be applied towards new purchases as long as the card is not past due 60 days. If the card is past due 60 days then the credit card company can go back and retroactively apply the new rate to the new rate increase to purchases. If for six months the minimum payments are made on time after that, then the rate must be brought back to the original interest rate.
The last phase will occur in August 2010. That part of the Credit Card Act will better regulate gift cards.
Written by Denise Clay
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