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Changes in Credit Card Laws Will Benefit Consumers

You know that credit card issuers have been reacting strongly to the credit crisis. They’ve been raising interest rates, lowering credit limits, and closing accounts. Some of them are even offering bribes to customers to get them to pay off outstanding balances and close accounts.

These activities may affect more and more consumers as we get closer to February 2010, when the “Credit Cardholders Bill of Rights” goes into effect. This new law will severely limit some of the practices that have become common – and will benefit consumers.

For instance, credit card issuers will no longer be allowed to impose retroactive rate increases. If you charged purchases on your credit card at 9.9%, that rate will remain at 9.9% for those purchases, even if your rate on new purchases goes up.

The exception is if you are 60 days or more past due with payment. Then they can raise the rate on current balances, BUT, under a provision that goes into effect in August 2010, they have to drop the rate back down if you are not late with any more payments for six consecutive months.

Card issuers will be able to raise rates on new purchases – but only if they give you 45 days notice. Be careful with this, because the notice may come looking like “junk mail.” From now on, it will be wise to read everything that comes in the mail from your card issues.

Consumer advocates say the new law could have gone farther. For instance, the banks still won’t be required to give you fair warning of credit limit changes and they still will have no cap on the interest rate they can charge.

If you haven’t been reading all the mail from your credit card issuer, check your account on line before making major purchases. Otherwise, you could believe that you’ll be paying 9.9% when your true rate has gone to 29.9%. You could also find that you don’t have enough available credit to make a major purchase. If you don’t check and you do use the card, the purchase might be honored – but you’ll face a stiff over limit fee.

The good news with regard to credit limit changes is that they will no longer be allowed to drop your rate below your existing balance without giving you prior warning. They can’t surprise you with an over limit fee when you haven’t even used the card. Also be sure and check your credit report for accuracy in reporting.

About the Author

http://www.creditscorecowboy.com is the #1 source on the planet for a free credit report, identity theft software and a blog with a wealth of information writtten by lending professionals that know about credit and what determines ones creditworthiness.

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