House Moves to Accelerate the Effective Date of Credit Card Reform Legislation
In a rather overwhelming vote of 331-92, the House of Representatives voted to move up the effective date of the key provisions of when the credit card reform act will kick in to December 1, 2009. It was originally slated to go into effect on February 22, 2010.
As more and more consumers see increased fees and interest rates ahead of the reform act, Congress, in essence, was forced to step in and offer protection. Some consumers have seen their interest rates skyrocket to 29.99%.
The provisions affected include restricting credit card issuers from raising interest rates on existing balances as well as offering protection from minor infractions, such as having a single late payment, from triggering a huge rate increase.
The Senate, for their part, has similar legislation pending. Senate Banking Committee Chairman Christopher Dodd has even gone as far as to ask for an immediate freeze on interest rates on existing balances until the new laws go into effect. That doesn’t seem to be getting too much traction and may be more political grandstanding than anything else.
Predictably, the American Bankers Association is mounting strong opposition to the accelerated pace of the legislation. They contend that it will only further restrict their ability to grant credit to consumers and small businesses.
It must be pointed out, however, that while the new laws will restrict the ability of credit card companies to raise interest rates on existing balances, there will be no such restrictions on new charges. Put another way, the cost of carrying a balance is going to get a whole lot more expensive for cardholders.
Look for credit card issuers to become ever more creative in coming up with ways to charge fees and raise interest rates on future charges. Now more than ever it is of the utmost importance that you pay careful attention to any and all correspondence that you receive from your credit card company.
Related Information:
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