The Credit Card Act of 2009: Five Ways It Will Affect You

In these recessionary times, millions of Americans have found themselves drowning in one of the most expensive types of debt out there -- credit card debt. Thanks to the Credit Card Act of 2009, however, relief is on its way. Come February 22, 2010 (and potentially as soon as December 1, 2009) there will be new consumer protections put in place. This legislation has something for everyone.

1. ARE YOU UNDER 21? This regulation will help you save yourself from yourself, by restricting your access to credit cards. Gone are the days of free tee-shirts and pizzas in exchange for signing up for a credit card on America's college campuses. Credit card companies will no longer be able to issue credit cards to individuals under the age of 21 unless they either can provide proof that they can repay the money they are borrowing on that card or have a parent (or someone else over age 21) co-sign and agree to be responsible for that debt. Right now the average college student is graduating with over $3,000 of credit card debt so having this temptation removed is huge.

2. ARE YOU TRYING TO ESTABLISH YOUR CREDIT HISTORY? This regulation restricts all interest rate hikes during the first year a card has been issued. Unless you have a card with a variable interest rate, card issuers can no longer raise your interest rate in the first year after a new account is opened. The only exceptions are if the card was opened with a clearly stated promotional rate for at least 6 months or if you go more than 60 days without making your minimum monthly payment.

3. ARE YOU JUGGLING EXISTING CARDS? This regulation puts in all kinds of speed bumps you'll like. The interest rate on your existing debt can't be raised unless, once again it's a variable interest rate, the end of a promo period, or you are over 60 days late on your minimum payment (for any of these reasons you do not have to be notified). On top of this, for future debt that you may accrue on fixed rate cards, issuers have to give you 45 days notice on any rate changes. Issuers can no longer charge over-the-limit fees unless you've specifically asked to have your account set up to allow transactions over your credit limit. Two-cycle billing is now banned. And if you boo-boo and are 60 days late on a payment, after 6 months of on time payments the card issuer has to restore your prior interest rate.

4. ARE YOU DIGGING YOURSELF OUT OF DEBT? This regulation requires the fair application of payments. In the old days, paying off your credit card debt was akin to eating a layer cake with your fingers while blindfolded. By that I mean you'd send in a payment - but it wasn't always clear to you which layer of debt was being nibbled away at. More often than not, it was the lowest interest debt that got paid off first when you sent in that payment. Under the new rules it will be your highest interest debt that gets paid off first.

5. ARE YOU A GIFT CARD PACK RAT? This regulation will enable you to shop till you drop. It applies to both prepaid cards as well as retailer cards. The two biggest changes are that (1) You get a full five years from time of purchase (or whenever money was last put on the gift card) to use it - so no more surprise expirations and (2) As long as you've used the card once in the past 12 months, no "inactive" fees can be charged. (After 12 months of no activity you can be hit with 1 fee a month).

 

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Comments

[Levonsky]

When I found that I was being mistreated by card companies I stopped using the card, paid it off, and then canceled it.
That'll show'em.

[dctackett]

should be called the "Worthless Credit Card Act of 2009"

[ReesieKitty]

Yes , all of these reforms will do us no good at all. We have a small amount of cc debt from emergency repairs to our house and car last year and were paying it off regularly, making double payments and would have cleared it next spring. But hey= just in time, both our cards have raised the interest rates to 20% and 24% respectively!! So we will be unable to pay them off and by continuing to make the same payments will be able to essentially make an interest-only payment, barely paying on the premium.

'Reform' that allows credit card companies to set variable interest rates where ever they want BEFORE they go into effect are not REFORM at all. It's usury. Why are giant corporations protected from that and not individual citizens? A corporation has more citizen's rights than I do right now!

[eilish]

So true! With all the 'fair' advance notice to card companies, specific deadlines and delayed finalizing, this bill merely gave my credit card companies plenty of time to raise the rates, lower my limits, and drop my credit rating 80 points - for what? Being a constant on-time, holiday-chargin' great customer for 25 years?

[vippy]

Manisha - thanks to the Credit Card Act of 2009 the banks now can charge you a fee for inactivity if you don't use your card. How about Bank of America's fee from $ 29 to $ 99 for paying off your balance every month? You call that "sweeping?" Who is in charge here, I would say the MAFIA and our
uninformed reporters or perhaps they were paid off, too?

[itolduso]

We wish the Mafia was in charge....compared to todays banks, the mob is much more compassionate & fair

[vippy]

As I said, they call this "sweeping changes?" Do you really think this is a good bill? Once you get a credit card one should not be able to be hit with a higher interest rate later on, now that would be sweeping, like we used to have. If those rules are good rules then I fear for this country, we are stupid!
They threw us crumbs and you can't see it?

[iridium53]

Oh, but you forgot no controls on interest rates.

I've got a credit rating of 810, but they just raised my interest rate to 29.9%.

Thanks to the lack of action from Democrats (the new do-nothing party) on Chris Dodd's Credit Card Act of 2009.

For the banks, money as donations can buy anything.

[LynnW49]

Too little too late:
"The interest rate on your existing debt can't be raised unless, once again it's a variable interest rate, the end of a promo period, or you are over 60 days late on your minimum payment (for any of these reasons you do not have to be notified). On top of this, for future debt that you may accrue on fixed rate cards, issuers have to give you 45 days notice on any rate changes. Issuers can no longer charge over-the-limit fees unless you've specifically asked to have your account set up to allow transactions over your credit limit."

By then, most folks who have been gamely trying to keep up will be way behind thanks to the 30% interest rates imposed willy-nilly while the new regulations were just being discussed. Unless items like the one quoted are retroactive, it is too late.

[steppenwolfsayshi]

Moderator, please! I'm allowed to have contrary opinions. It does not violate the comment policy!

Making a law forbidding people under the age of 21 to get a credit card is bad without a parental cosigner is ridiculous and bad policy. Every heard of generational poverty? Young people are becoming more and more wards of their parents for longer and longer periods of time, in which they are dependent on the good graces and economic stability of their parents for their own future. This is bad for their parents who are economically strained supporting them and for young people who are increasingly marginalized by discriminatory rules. Good policy would give young people starting in their teenage years the tools to become independent: jobs, jobs training, affordable credit, and affordable college education.

[coastalcarla]

I was down to one credit card. And they blew it last month. They "cancelled the program" that my card was on, because it had a fixed 11.9% rate. Then they offered to transfer the balance to a card that started at 27.9%. I'm paying this one last small card off, and then using my Visa debit card through my credit union for anything that requires a credit card number (hotel reservations, rental cars, etc.). I'm getting all kinds of offers for cards in the mail. So just to cost them money, I'm taking the business reply envelope in the offers and putting a note inside that says "No Thanks!" and sending it back to them. Every envelope that comes back costs them $ .48 - if more people did that, they'd quit sending so many of those things out.

[stevenws]

My credit card rate was jacked up the other day... apparently with millions of others across this great capitalistic USof A. Let's see... the banks had fair warning -15 months- to rob their customers before the police show up in July 2010. But would our bankers do that... especially to customers with good payment and credit records? Do they serve ice cubes in hell? But wait, I read a letter posted on the "United States Senate Committee on Banking, Housing, and Urban Affairs", that Senator Dodd and Senator Schumer had sent to Ben Bernanke at the Federal Reserve. They "urged" the Feds to "...use your emergency authority under the “good cause” exception to the Administrative Procedures Act, to immediately implement the provision in the final rules you have previously issued concerning interest rate increases on existing balances for consumer credit cards." "Therefore, we strongly urge you to utilize your emergency powers to put this rule into place immediately and protect consumers from these outrageous rate increases." Did the Federal Reserve do this - for the consumer???

[dctackett]

well... why would the FED do that?... the FED is owned by those large banks... literally.