House Passes Credit Card Legislation
May 20th, 2009 | By Rob | Category: Government, top
With a vote of 361-64, the House of Representatives approved the credit card legislation which passed the Senate yesterday. The bill is expected to be signed by President Obama on Friday, and will go into effect 9 months later. That means for the next 9 months, you’ll have to be watchful to changes in the interest rates on your credit cards as banks seek to raise your rate before the law goes into effect.
I haven’t had a chance to read the full bill, but the key provisions of the credit card law as I understand them are:
- Banks may only raise interest rates on existing balances if the cardholder is 60 days late on a payment. If a credit card company does raise your interest rates, it must return it to the original interest rate if you make 6 consecutive on-time monthly payments. No more surprise interest rate increases after you have charged purchases at a low interest rate!
- The interest rate on future credit card purchases can only be increased with 45 days notice. I believe there are also new rules governing teaser rates - the initial, low or no interest rate credit card rates can’t be raised for the first year after opening a credit card account.
- Payments on credit cards with more than one interest rate must be applied first to the debt with the highest rate.
- The bill requires credit card applicants who are under 21 (in other words, college students) either have the ability to repay the money borrowed or have a parent will cosign for them.
- The legislation also requires plain language disclosures so that contracts are easier to understand.
- No fee for paying a credit card bill by online or through an automated phone system.
- No fee may be charged for purchases made which put you over your credit limit unless you are notified that it will put you over the limit and you authorize the charge to your card anyway. I’ve also seen this worded slightly differently - in that there will be a system to allow you to opt in if you would like charges over your limit to go through but the bank will be limited to charging three fees per incident.
We’ll have plenty more information on the changes in the next few days and weeks. Don’t forget to subscribe to our rss feed or our email delivery so that you automatically get our new posts. Here are just a few of our recent posts that may be of interest to you in the meantime:
I am so upset now! Today (June 2, 2009) I received a letter from CHASE credit card and on the front it says, IMPORTANT CHANGE IN TERMS NOTICE ENCLOSED — PLEASE READ. It starts out saying, “We are sending you this notice to let you know that we will be making some changes to your credit card account in response to market conditions and to maintain profitability on your account. These changes will be effective with your JULY 2009 statement.” Now I will make a long story short. The credit card was a WaMu Visa when I applied but as March 2009 it became a CHASE Visa. My interest rate for purchases with WaMu was 9.99%.Then on my March 2009 statement from CHASE I noticed it was changed to 10.24%! Now they are telling me that it will change to the Prime Rate plus 10.99%, which as of April 17, 2009 would be 14.24%! If I do not want to accept the APR changes I must call or write no later than June 22, 2009. Then they will close my account and of course I will still be responsible for the outstanding balance which is $3,832.56. So, why can’t the bill that President Obama just signed become effective immediately!?! We need it now!!!!!!!!!!
I am 61 years old and have never, and I can back it up, missed a credit card payment ever in over 40 years. Yet, the banks know that the new legislation does not go into affect anytime soon and are taking advantage of their long time, perfect customers by raising rates immediately, and worst of all, changing low fixed rates to high variables. I might as well go to the mafia for credit! I checked my credit score because I’ve never seen such greed in my long lifetime. It is excellent, as I expected. The reasons for raising my rates to unacceptable levels, according to the banks, is the economy and their profitability. They need to agree to the contract that their customers with perfect records agreed to. It is at the very least a contract violation on their part, not to mention that it is pure THEFT. After all, they got the country into this mess, with support from the previous administration.
Things to make you go Hmmm. I had an acct with WaMu at less then 10 % intrest. Chase purchased the acct and immediately increased the intrest…Now less then 6 monthes later they have incresed the intrest again. I have always paid ontime and always overpaid the minimun. When I contacted them they stated in a nutshell “The bill doesnt go into effect for 9 to 15 monthes and due to market conditions we will continue to increase rates regardless of past payment history” also ” If you dont like the rate increases you can choose to opt out”. In there own pamplet and also via conversations with them this means “If you dont choose to go with the flow..you can close your acct and still be charged the inflated intrest rates” Did congress take this into acct when they decided to pass this bill….Basically it allows credit card companies to jack rates through the roof as long as they beat the deadline before the bill goes into effect. CONSUMERS BEWARE
[...] been reading about credit card law changes for 2009, but I still don’t understand all the details. Anyone else come across this sort of [...]
For years credit card company’s have dangled the old “you can have whet the Jones have”, in front of people; and for the most part it worked and they have profited from it.
It is a tragedy to say the least to have any consumer pay in excess of reasonable interest rates. I knew of a family that missed one payment, (first ever) and their interest rate went from 8.99% to almost 23%. The only way to totally put an end to the abuse from the lending institutions is to do as Dave Ramsey does and take the credit cards and cut them up.
Go a head and close the credit card. Yes, you will have to repay it but you were paying it anyway. Put extra money, or find extra money each month to totally pay it off. In the long run, you will be the one coming out on top.