How the New Credit Card Law Can Help You

President Barack Obama signed the New Credit Card Law on May 22, 2009. The first batch of changes already took effect on August 2009 while the rest will take effect on February 22, 2010. Below are the highlights that you’ll be glad to know:

Controlled Interest Rate Hike. Increased rates are still allowed but only on these three conditions:

  • The promotional rate has expired
  • The Variable Index Rate has increased
  • The cardholder has been delinquent for 60 days or more

Under the New Law, the “Universal Default” clause is not allowed. Furthermore, if the rate will change, the Issuer must give advanced notice at least 45 days prior to the new rate.

The privilege to opt out. If upon reviewing the changes in the Terms and Conditions, the cardholder is unhappy about it, he/she can opt out, close out the account and pay off the balances under the old Terms. The repayment period can last up to 5 years.

Student credit card restrictions. Young people under the age 21 cannot open an account on their own (co-signer is required) unless they can show proof of independent income. In addition, Issuers are not allowed to do advertising campaigns within 1,000 feet from college campuses.

[Article: Advantages of the New Credit Card Law]

More opportunity to make payments on time. The new law requires Issuers to send a billing statement 21 days before the due date. That is a much longer time compared to the old 14-day billing notice. Cut-off times must be set after 5 pm. Also, late fees cannot be imposed if the due date falls on a weekend or a holiday.

Highest rate balance must be slashed off first. Payments made must be applied to the highest-rate debt first. Thus, quick debt build-up can be avoided and cardholders will have an easier time paying off their entire balance.

No double-cycle billing. The double-cycle billing is based upon the previous and current balance so finance charges can be higher than its supposed to. Under the New law, the double-cycle billing is not allowed.

Lower fees for subprime credit cards. People who want to apply for a bad credit credit card can find relief knowing that the upfront fees cannot exceed 25% of their credit limit.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

1 Comment
  1. I agree that there are many ways how this new credit card act will help us.There are many ways on how these new act will be beneficial to all.It will actually gives fairness and equality to every one.We just need to know how are we going to do use it properly.Everyone should be aware of what they are and aren’t entitled to under the Credit CARD Act, and credit card companies won’t go out of their way to tell you until they’ve been sued a few times for non-compliance.(That’s the way a lot of businesses work – laws are ignored until they get caught.)For instance, you can’t have any rates raised on you or limits cut without 45 days notice at least. They also can’t change terms of the original contract. There have been a lot of accusations of predatory lending over the last few years, some at mortgage companies, or at payday loans lenders, though credit card companies could be construed as the most predatory of all.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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