bobbyw24
03-05-2010, 11:32 AM
Joann M. Weiner
The president has high hopes for the Credit Card Accountability, Responsibility and Disclosure Act -- the Credit CARD Act -- which took effect on Monday. The Federal Deposit Insurance Corp. calls it the most comprehensive reform in this area since the Truth in Lending Act was enacted in 1968. But it has plenty of shortcomings, too.
The new rules mean that credit card companies cannot "retroactively increase rates or increase rates in the first year you open an account, charge misleading late fees or use over-limit fee traps," said President Obama in a statement. The president reminded consumers that the act does not absolve them of their personal responsibility to "pay their bills" but it does "finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions."
Credit card reform affects nearly all American families. Some 78 percent of households have a credit card and there are more than 631 million credit cards in circulation. Consumers charged more than $2.1 trillion on 26.5 billion transactions in 2008. With this much credit capacity -- the 181 million credit cardholders have an average of 5.4 cards each -- it's no surprise that consumers do not pay off their cards each month. The typical cardholder had $10,679 in debt outstanding at the end of 2008, according to the Nilson Report.
The Credit CARD Act has many good and well-intentioned provisions. For example, it requires credit card companies to make their practices more transparent so that customers can tell exactly how much they are paying in interest and fees when they do not pay off their balance each month. It imposes broad restrictions on companies' ability to increase the interest rate on outstanding balances and to levy penalties for going over the credit limit.
Credit card issuers must also mail consumers their statements three weeks, rather than two weeks, before the payment is due. Companies must apply payments that exceed the minimum to the outstanding balances with the highest interest rate first. Credit card issuers must allow consumers to opt out of their card if they do not agree to changes in their credit terms. It also requires card companies to post details of their standard credit agreement on the Internet so that consumers can more easily do comparison shopping.
http://www.politicsdaily.com/2010/02/27/the-new-credit-card-law-feel-good-changes-but-not-a-lot-of-re/
The president has high hopes for the Credit Card Accountability, Responsibility and Disclosure Act -- the Credit CARD Act -- which took effect on Monday. The Federal Deposit Insurance Corp. calls it the most comprehensive reform in this area since the Truth in Lending Act was enacted in 1968. But it has plenty of shortcomings, too.
The new rules mean that credit card companies cannot "retroactively increase rates or increase rates in the first year you open an account, charge misleading late fees or use over-limit fee traps," said President Obama in a statement. The president reminded consumers that the act does not absolve them of their personal responsibility to "pay their bills" but it does "finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions."
Credit card reform affects nearly all American families. Some 78 percent of households have a credit card and there are more than 631 million credit cards in circulation. Consumers charged more than $2.1 trillion on 26.5 billion transactions in 2008. With this much credit capacity -- the 181 million credit cardholders have an average of 5.4 cards each -- it's no surprise that consumers do not pay off their cards each month. The typical cardholder had $10,679 in debt outstanding at the end of 2008, according to the Nilson Report.
The Credit CARD Act has many good and well-intentioned provisions. For example, it requires credit card companies to make their practices more transparent so that customers can tell exactly how much they are paying in interest and fees when they do not pay off their balance each month. It imposes broad restrictions on companies' ability to increase the interest rate on outstanding balances and to levy penalties for going over the credit limit.
Credit card issuers must also mail consumers their statements three weeks, rather than two weeks, before the payment is due. Companies must apply payments that exceed the minimum to the outstanding balances with the highest interest rate first. Credit card issuers must allow consumers to opt out of their card if they do not agree to changes in their credit terms. It also requires card companies to post details of their standard credit agreement on the Internet so that consumers can more easily do comparison shopping.
http://www.politicsdaily.com/2010/02/27/the-new-credit-card-law-feel-good-changes-but-not-a-lot-of-re/