New credit card law officially in effect

Aa tough new law cracking down on the abusive practices of some credit-card companies has officially gone into effect. The CARD Act, passed by the House as H.R. 627, contains several strict protections for consumers, including banning unfair interest rate increases and outlawing abusive fees and penalties by credit card companies.

Known as the Credit Cardholders’ Bill of Rights, the legislation was passed by Congress over the summer and began to take effect in August. As of today, its major provisions are in full effect. These include:

• Requires advance, written notice to consumers before interest rates increase, and requires credit card companies to inform consumers of their right to cancel before the increase takes effect.
• Prohibits arbitrary interest rate increases and universal default on existing balances.
• Prohibits credit card companies from charging over-limit fees in most circumstances.
• Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest.
• Prohibits companies from setting early morning deadlines for credit card payments.
• Prohibits interest charges on debt paid on time (double-cycle billing ban).
• Requires credit card companies extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended.
• Protects recipients of gift cards by requiring all gift cards to have at least a five-year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time.
• Requires penalty fees to be reasonable and proportional to the violation that caused them.

Related posts:

1. ATTORNEY GENERAL WARNS FLORIDA ABOUT CREDIT REPAIR & DEBT SETTLEMENT SCAMS
2. Klein votes for Wall Street Reform and Consumer Protection Act
3. FTC: New consumer protections reguarding debt relief
4. Fitch affirms Coral Springs’ AAA-stable credit rating
5. Lauderdale Lakes instituting prescription drug card program

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Posted by Andrea Freygang on Feb 23 2010. Filed under Broward County, Business, Federal Government, Fort Lauderdale, Local news, Money. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry