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CREDIT CARD RULES CHANGE
Posted by: Darrell Castle
February 24, 2010
Topic: Bankruptcy
The following is a brief summary of credit card rules changes as modified by the new law taking effect immediately, and as reported by the Memphis Commercial Appeal: 1. Interest rates can't be raised in the first year unless an introductory rate has come to an end. After that, cardholders must be notified 45 days in advance of any rate change. 2. For existing balances, rates can't be raised unless the account is at least 60 days past due. 3. Agreements will be clarified so cardholders can see how long it will take to pay off a balance if only minimum payments are made. 4. Service fees, such as activation and annual fees will be capped at 25 percent of the credit limit during the first year of use. After that, there is no cap. 5. Statements must be sent out 21 days before the payment due date. 6. Due dates will remain constant. 7. Credit cards may no longer be issued to anyone under age 21, unless the applicant has a co-signer or can show independent means to pay the debt.
Credit card companies had nine months to prepare for the new law and took steps to protect themselves. They raised interest rates, created new fees, cut credit lines, and closed millions of accounts. The new law does protect credit card holders in the ways previously mentioned, but it also impacts people in ways some may consider negative. It has helped make it more difficult for millions of people to get credit and has made credit more expensive. About 40% of banks cut credit lines on existing accounts which eliminated about $1 trillion of existing unused credit according to Tower Group Consultants. Credit lines were most frequently cut in places most severely affected by high unemployment and declining housing values. The law makes credit less profitable so some less than prime credit risks may not be able to get credit at all for a few years. Card marketing on college campuses is strictly limited and students must show independent means to repay. I guess Congress wanted college students indebted only to the U.S. Government for the rest of their lives instead of credit card companies as well.
Hard times are here and times will get worse for many. Make a commitment to live the rest of your life free of debt. Do it right now before it's too late.
