CARD Act of 2009

The CARD Act also known as The Credit Card Accountability Responsibility And Disclosure Act of 2009 Or the

Credit CARD Act of 2009

Some call it the credit card reform of 2010

I call it a start!!


Here are the Changes

I'll list the changes I like the best and that is the restriction of over-limit-fees.

Well...some are calling it the restriction others the prohibition but the original language of the bill is the required opt-in.



    This means that if your card imposes fees for going over your limit you have to agree to those fees.

    Even if you do agree to the fees your card issuer has to put a notice out to you that there is a charge that will put you over your limit.



Generally for most people who are in control of their finances over-the-limit fees are not much of a concern. But we've all had those emergencies (at least most of us) where you don't care (the car transmission blew and you just want to go home).

Those are the times you would actually agree to such a fee.

What this card act change has brought in the Acts' own language is....

prevention of unfair or deceptive acts or practices in connection with the manipulation of credit limits designed to increase over-the-limit fees or other penalty fees.



Thank you....I'm sure we all have stories of that happening to us!!!!


MORE RESTRICTIONS ON FEES




Another card act reform is no more fees on payments including phone or any means except by an expedited one that requires the service of a live customer service representative.

  • The due date must now be on the same calender day every month and the bill if sent by mail must arrive 21 days before the due date.

  • All payments must be credited by 5 pm of the date you make the payment or the date they receive it.

  • If you are paying in person directly at the bank, check your statement before you leave. A certain major bank that I previously dealt with would regularly post date my payment past the due date.

    That practice most likely lead to this card act reform change...

  • If a branch of a creditor accepts payments at that branch the date the payment is made must be the date the payment is posted.

    Still check before you leave, especially if you paid cash. You have no recourse if you leave and enough time goes by that you can not prove a dispute. Its your word against theirs.

  • Additionally payments that fall on non business days or holidays cannot be considered late if received on the following business day.





Card act changes that make a difference



A more lengthy Card act reform is the 45 day notice requirement on major changes to the card agreement.


I say it's lengthy as it applies to many instances.

  • You will have the right to cancel option if you do not agree to the terms of the change.

  • If you do use the cancel option you must do so by the date the changes are to occur.

  • The customer can either cancel or close the account and it cannot be considered a default.

  • The creditor cannot demand immediate repayment of the balance.


    The following rules for repayment must be constituted:

    The balance must be structured into a payment plan that stretches over a 5 year schedule

    or

    The new monthly minimum payment can be no more than twice the percentage of the previous monthly minimum.

  • Accounts that do fall behind by 60 days can have their rates increased but must be alerted by the same 45 day notice.

  • They will have the same option to cancel and must be given the reason for the increase but on the other hand alerted to the fact that the increase will terminate after 6 consecutive timely payments.



Another credit card reform I like is that accounts must now be reviewed every 6 months.The same methodology used to increase the rate of an account must also be used at review time and if it shows a reason to reduce the rate it must be done.





Many times new accounts opened are given an attractive rate to start and then that rate is quickly taken away.


  • The new Card act says the opening rate must remain on the account for up to 12 months. Increases thereafter can only apply to new purchases. If there is a balance from the first 12 months the initial rate applies to that balance.

  • Promotional rates must apply for at least 6 months. Exceptions to this are accounts with variable rates applied. Or if you fall behind by 60 days on the account and again the 45 day notice is required.

  • Cards that do have varying balances with different rates must now be treated differently.



If you pay any amount over the minimum balance the extra amount must go toward the balance with the higher interest rate.

That sneaky old practice of raising interest rates by using your problematic accounts with another creditor as the basis for raising the rate with your account with them is now prohibited.


Protection of young consumers



Those under 21 must now either have a co-signer over 21 on the account or Show proof of income.

Shouldn't they have had income anyway????

Maybe this should be called "protection of the parents of children under 21"!!

Young consumers are often targeted (mostly for THEIR inexperience,) the next set of changes are for their protection.

  • Pre-screened offers can only be made to those under 21 who have consented to them in advance.
  • An account with an under 21 individual that also has a co-signer cannot have their credit limit extended with out the knowledge and consent of the co-signer.
  • Card issuers cannot provide gifts as incentives to apply for credit to those under 21 college students on or near campus or at events sponsored by campus.




The Card act being an amendment to the Truth in Lending Act now requires billing statements to include a disclosure that states the total time and interest it will take to pay the card off making only the minimum payments.

That ought to open the eyes of some that do too much impulse shopping!!

It also must state the monthly payment needed to pay the balance off in a 36 month period and a toll free number for credit counseling and debt management services.





In general many of these changes will make it harder for the younger consumer or those with bad credit to get credit.


The true fact is that the previous ease of those who never should have been qualified for credit or for the extreme limits that were given by creditors who were motivated by greed instead of reasonableness has in part led this country to the economic problems of today.


Even if you do find yourself in a difficult to get credit situation, know this, that with knowledge, planning and good helping of self discipline anyone can work towards being qualified for credit.





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