Installment Loans Benefit From New credit card laws 2010
Effective Monday, new credit cards will offer consumers more protection, adding peace of mind to an industry in turmoil. The main changes have been focused on “retroactive rate increases” and “impulsive penalty interest rates”. Surprisingly the fee’s incurred by rate increases and penalty’s average at a minimum of $10 billion per year, stated by The Pew Charitable Trusts, and By Tracey D. Samuelson Correspondent / February 22, 2010. This will be a benefit to people with good enough credit to have credit cards but for many it will increase their reliance on installment loans for bad credit.
Credit Card Accountability, Responsibility, and Disclosure (CARD) Act
There are still many ways the credit card industry can improve consumer security, but in the mean-time the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act will add the extra protection needed for U.S consumers. The (CARD) Act was signed into legislation by President Obama May of 2009.
The first phase of the legislation
Last August 2009, the first phase of this legislation started to take shape. This legislation allows U.S consumers more control by allowing cardholders to decline major changes in line with their credit-card contracts. The credit-card industry has been practicing in an unbalanced manner for far too long. These changes will solidify a new America for our future generations, and responsible money practices across the board.
Federal Reserve rules on “reasonable and proportional” penalty fees and charges.
The final phase of this Act will focus on the Federal Reserves rules on “reasonable and proportional penalty fees and charges”. Many of these rules have already been implemented but there are still many changes left to be re-organized. Below is a list composed by Tracey D. Samuelson Correspondent / February 22, 2010. about some of the key changes U.S consumers can expect.
- The end of confusing billing practices
Credit-card payments will be due at the same time each month, with notification of the bill made at least 21 days in advance of its due date. Payments will be applied to highest interest-rate balances first so that customers can pay off their balances faster and more cheaply. Finally, credit-card companies will be obligated to use “plain language in plain sight” on all materials related to the account and periodically display on statements how long it would take consumers to pay off their existing balance and interest charges if they paid only the minimum due.
- Interest-rate reform
Nearly all interest-rate increases on outstanding balances will be prohibited and card companies must notify the consumer 45 days in advance of an interest-rate increase. Additionally, there cannot be any interest rate increases for the first year any account is open.
- Opting-in for overdraft and over-limit protections
Customers will now have to opt-in to an overdraft program instead of being automatically enrolled. This means that if cardholders try to make a purchase that exceeds their limit or overdraws a debit account, their card will simply be declined. Under the old rules, the transaction could go through and the consumer would be fined.
- Protections for young consumers
Credit-card companies face greater restrictions on marketing cards to college students. More generally, those under 21 will have to prove that they have the means to pay off their card limits or have a cosigner before they can be granted a card.