The First Credit Card Reform Rules get Underway
August 20 marked the first day of the new credit card reform. Although the majority of the new laws won’t take effect until February 2010, there were a select few that made their way into the newest credit card legislation last week.
The new credit card rules, under the Credit Card Accountability, Responsibility and Disclosure Act, include: creditors must give their customers a 45-day notice of interest rate or fee increases; and creditors must allow their customers at least 21 days to pay their bill each month.
The Credit Card Accountability, Responsibility and Disclosure Act, which was signed into law back in May by President Obama, is designed to put an end to questionable practices by credit card companies. The many rules of this law include placing restrictions on credit card billing practices.
Although many agree that credit card reform is long overdue, it’s important to see both sides of the equation. In an effort to fight back against these regulations – and control the amount of money they will lose – many creditors have already begun imposing their own set of new regulations.
What to Expect from Creditors
As many of us have already seen, creditors have begun raising interest rates. In fact, according to Bankrate.com, the average variable interest rate on new cards is about 11.22%, up from 10.69% just three months ago.
Many creditors have begun revamping their terms and conditions and have found ways around the new credit card restrictions. In other words, many credit card holders have seen their creditors switch up the rules in just the last, few months.
For example, many creditors have begun not only hiking up interest rates, but also slashing credit limits and canceling cards for less-than-stellar credit card customers.
In addition, don’t expect many mail solicitations for credit cards – although that may not be a bad thing – and don’t expect many credit card companies to offer introductory or “teaser” rates for new credit cards.
Whether we like it or not, we all must be prepared for creditors to fight back against the new credit card regulations. As with anything else, sometimes we all must take the good with the bad and learn to adjust accordingly.
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