Credit Card Reform Underway

The rules governing credit cards may soon change, as Congress and the President pursue sweeping changes to the nation’s credit card laws that could affect many people suffering with credit card debt.

In April, the U.S. House of Representatives passed the extensive Credit Cardholders’ Bill of Rights Act of 2009. The legislation, if approved, would establish new rules about the charges, fees and interest that a credit card provider can use to zap its consumers. The bill also makes rules about opening and closing accounts, billing, and other practices that are viewed by some as unfair to the consumer.  

Among the many regulations it lists, the bill:
1.    Requires 45 days of advance notice before the lender can raise rates or make a significant contract change.
2.    Makes a promotional interest rate last six months before it can change.
3.    Gives the cardholder 30 days of notice before a lender can close an account.
4.    Prevents a “double billing” cycle due to late payments.
5.    Forces banks to apply a “periodic” payment to the account with the highest interest rate.
6.    Makes credit card companies send bills 21 days before their due date.
7.    Limits the credit that can be given to a college student.
8.    Prohibits credit cards to customers under age 18 without emancipation or parental approval.
9.    Allows only one over-the-limit fee per cycle.
10.     Expands what a lender must reveal about minimum monthly payments.

It also limits the reasons that a credit card company can raise a card’s interest rate. The annual percentage rate can be raised are for an index change, the end of a promotional rate, a payment 30 days past due or if a cardholder doesn’t stick to his workout plan.