Card Act February 2010: Legislation and Regulations?

Now that the February 2010 Credit Card Act is being implemented are we again learning about unintended consequences?
The new Credit Card Act was recently passed by Congress and signed into law by President Obama, it goes into effect today February 22.

Lots of fees are being put in place.
The way I see it, now the responsible credit card users are getting fees and rates that they do not deserve. What is the legislation behind the Card Act of February 2010?
What about the regulations?

asked by Bob in Personal Finance | 2358 views | 02-22-2010 at 06:28 PM

The CARD Act contains a number of provisions designed to make credit card disclosures more clear for consumers and to put limits on credit card banks’ ability to change terms and charge certain types of fees.

Just two of the practices targeted – retroactive rate increases and so-called “hair-trigger” penalty interest rates – cost US consumers a minimum of $10 billion per year, according to a recent study by The Pew Charitable Trusts.

The first phase of the legislation, which took effect last August, allowed cardholders to decline significant changes in terms to their credit-card agreements.

"Regulation" is often a dirty word to small business owners, but few would object to new laws offering them similar protection. With bank loans and credit lines drying up, credit cards are one of the only sources left for fast capital injections.

Some of the new rules:

- Credit card companies now have to provide a late payment warning and they have to tell you about any additional fees and higher interest rates that could occur as a result of a late payments.
- Companies will still be able to raise interest rates in some cases, such as when you are more than 60 days late paying your bill or an introductory rate expires after six months.
- Companies have to provide you with an estimate of how long it could take to pay off your balance if you make only the minimum payment each month .

In the past, companies were almost uniformly permitted to hike interest rates at will, even on existing balances -- and even if cardholder payments were current. Aside from the interest rate notification, companies can't hike rates on existing balances unless they are already 60 days past due.

The rules also call for card statements to be written in plain language, with promotional rates clearly signaled.

Citigroup Inc, American Express, Capital One Financial Corp and Discover Financial Services, along with JPMorgan and Bank of America, are the six largest U.S. card issuers.

answered by Adam | 02-22-2010 at 06:43 PM

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