Credit CARD Act Reintroduced Into Senate
Feb 13th, 2009 | By Rob | Category: Government
Senator Dodd, Chairman of the Senate Banking Committee, reintroduced the Credit Card Accountability, Responsibility and Disclosure Act into the U.S. Senate this week. Although some of the provisions are similar to the Federal Reserve regulations which will be implemented in July 2010, there are additional provisions in the bill as currently drafted which make it more interesting to those awaiting credit card debt relief.
Among the provisions which I expect to be eagerly anticipated among consumers in this bill which attempts to “[p]rotect consumers from any-time, any reason interest rate increases and account changes” are:
- Credit card issuers who penalize the cardholder for a late payment with a higher rate will have to lower the interest rate if no further violations occur after six months. The federal reserve regulations only specify when a credit card company can increase credit card rates.
- They will also be required to apply payments on the principal of the credit card balance to the debt with the highest rate of interest when debt is charged multiple interest rates. Currently, financial institutions apply payments to the balance with the lowest interest rate. Under the federal reserve regulations, they will have to at least apply payments on the principal to the debt at different rates equally.
- Finally, the legislation also proposes actions to limit credit card offers to individuals under 21 years of age. These provisions include a prohibition on prescreened offer mailings to those under 21 (unless they specifically opt in) and a requirement that a parent or guardian sign the application, unless the individual has an independent means of paying for their spending or have taken a financial education class. This provision appears directly targeted at recent news about the marketing of credit card offers toward college students.
Unlike the House Credit Cardholders’ Bill of Rights which as reintroduced seemed to merely speed up implementation of the Federal Reserve’s new credit card regulations, the Credit CARD Act or C.A.R.D. Act as it is known in short, appears to actually add some important provisions to the credit card laws.
