Examining the Newest Credit Card Legislation Set to go into Effect
Starting next week, credit card companies will be forced to make some changes that will affect all of us who carry credit cards.
New Interest Rate/Grace Period Legislation
One of the most prominent features of this area of the new credit card legislation is that creditors must provide their customers with at least 45 days’ notice before they can raise their interest rates or make other changes to their card’s terms and agreements.
This 45-day notice will enable cardholders to decline this rate increase. Although the card account will be closed, the cardholder will have the option of paying off the balance of their credit card at the original rate.
Another feature of the new credit card legislation due to go into effect next week is that creditors must provide cardholders with at least 21 days to pay their credit card bill. As many of us will attest to, many creditors have shortened this window substantially over the last, few years in an attempt to collect their money.
The new credit card legislation, which was enacted in May by President Obama, will not officially go into effect until February 2010, with the exception of the above mentioned laws.
The Effects of the Credit Card Legislation
As a credit card holder, you have likely seen creditors raising interest rates and hiking minimum payments in anticipation of this new law. Another result of this law, says many financial analysts, is that creditors are pulling back consumers’ credit limits and canceling credit cards on unsuspecting consumers.
At this point, it appears to be a bit of a tug-of-war going on between the government and creditors. Many creditors, who anticipate catastrophic losses as a result of the credit card legislation, are fighting back by raising rates and payments before the law goes into effect.
Many financial analysts agree that the new credit card legislation essentially gives creditors an eight-month loophole during which time they can make the necessary changes to counter the changes mandated by the government.
It is more important than ever to remain educated about your credit card accounts, and to carefully read all material that you receive. And, as always, if you don’t agree with your creditor’s new terms and conditions, you have the right to cancel the card.
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