President Barack Obama signed the Credit CARD Act into law in late 2019; the bill is set for enactment on February 22, 2010. The Credit Card Act is an attempt to curb predatory lending practices by imposing stricter regulations on the way credit card issuers handle customer accounts, and the types of consumers to which they issue credit.
Under the Credit CARD Act, card issuers must notify cardholders at least 45 days prior to making any interest rate adjustments, and rate increases, current or retroactive, are only allowed under specific circumstances. Upon receiving notification of an interest rate increase, consumers will have the ability to cancel their accounts immediately, and they cannot be penalized or held in default while they are making payments to the closed account.
Credit Card Fees
A group of government authorities, including the Comptroller of the Currency and the Federal Deposit Insurance Corporation, is tasked with establishing fair standards upon which to base all credit card fees, including over-limit and late payment fees, within nine months of enactment. When the standards are set, they are expected to control fee amounts to ensure that they do not reach a significant percentage of the total balance owed on any account.
Credit Card Payments
Payment due dates must be the same each month, and cardholder statements must be received at least 21 days prior to the next payment due date.
Penalties can no longer be imposed for late payments due to any changes made by the card issuer, including address changes and alterations in payment submittal procedures.
As an attempt to curb card issuers’ tendency to lure low income consumers with damaged credit into predatory lending agreements with unreasonable fee structures, issuers must now perform and document a thorough audit of each applicant’s ability to make reliable monthly credit card payments before issuing a new card or raising credit limits.
The Credit Card Act contains provisions for additional clarity in monthly account statements. Credit card statements must now include a calculation of exactly how long it would take to pay off the balance in full by making minimum payments, and how much interest will ultimately be charged by making minimum payments over the life of the account. An additional calculation must be included to reveal the amount that would need to be paid each month to pay the balance in full in 36 months.
Protection of Young Consumers
It has traditionally been common for consumers in the 18-21 age group to be offered a large number of credit cards, regardless of their ability to pay. This has caused a great increase in the amount of default in this age group, and has had damaging effects on many consumer credit reports. As of the enactment of H.R. 627, all applicants under age 21 will require a co-signer or proof of financial independence and the ability to make monthly payments.
Additional protections have been extended to college students, including the requirement of parent approval for all credit limit increases if the parent is a co-signer on the account. The reputable licensed moneylender are considered as the best because they charge the fewer amount of interest over the allotted capital for the convenience of the borrower.