In the game of credit cards, consumers have consistently been at the short end of the stick. The major banks that provide the cards, and reap the associated profits, have spread enough lobbying money around to Washington lawmakers to keep any regulatory changes that might adversely affect their profits from becoming law for many years. During the last two presidential terms, any attempt to change the credit card regulatory framework usually fizzled, with the idea that everything was fine as it was, and this helped provide “more choice for the consumer.”

However, with the financial meltdown of 2007-2009 and the resulting change in government in Washington, the new administration made credit card reform a priority, directly linking it to other problems that were the result of too much consumer debt. This change in regulation, known officially as the Credit CARD act of 2009, was enacted in May of 2009. However, the first provisions of the bill do not become effective until February, 2010.

Some key points that cardholders should consider:

* Any rate increase for a credit card must be given in writing 45 days in advance of the increase to the cardholder.

* Eliminates the “universal default” practice of allowing a lender to raise rates on an account in good standing due to delinquencies on other, unrelated accounts with other companies.

* Prohibits card companies from arbitrarily changing the terms of the original contract, also known as “any time, any reason” repricing.

* Prohibits payment due dates from falling on a non-workday for banks, automatically triggering a late fee. If a due date falls on a weekend or holiday, the law requires the due date to be pushed back to the next full workday.

* Gives cardholders 21 days to pay their bills, up from the current required minimum of 14 days.

* Gives cardholders 3 billing cycles to pay off their balance at existing terms if they do get hit with an interest rate hike.

* Requires all payments to be allocated to the portion of the balance with the highest rate in descending order to the lowest rate. High rate debt is paid off first, which is not currently the case.

* Limits over the limit fees to a maximum of 3 per account. Currently, some lenders have unlimited fees to those who exceed their credit limit.

There are many other provisions as well. Many credit card companies are in a scramble to begin hitting their current cardholders with new rate hikes, fees and restrictions ahead of the impending enforcement of regulation. What is striking about the above list of new regulations is that the credit card companies and banks would not do any of the above without being forced to by law.

Many banks, despite having been petitioning the government for bailout money only months before, still spent large sums of lobbying money to attempt to derail the legislation. At the very least, they hoped to water down its provisions in an attempt to make things easier for the industry. This gives you an indication of how far credit card abusive practices had come over the past several decades.

For the full text of the bill use this URL:

http://www.govtrack.us/congress/billtext.xpd?bill=h111-627

Neal Coxworth is an entrepreneur and a 17 year veteran of the consumer credit industry with experience in originating, underwriting and processing mortgage, student and consumer credit loans. http://www.lifeloansfreeinfo.com

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