Expect many changes in your credit card policy as President Barak Obama finally signs the CARD act into a federal law. The law, which stands for Credit Card Accountability, Responsibility, and Disclosure, took effect last Thursday.

Partial Launch

The law will be fully implemented on February next year. As of now, only some provisions of the law have kicked in. One of which is the week’s increase in payment notice. Credit card companies should now mail you 21 days before your bill is due. Previously, you are only given 14 days’ notice.

Also, if your credit card company plans to raise your interest, you must be notified 45 days in advance.  That is a month’s increase from the previous notification period of 15 days. Another change that you should be informed of 45 days in advance is the increase in your minimum payment.

This will give you more time to look for a less expensive credit card. If you do not want to keep your card anymore, you can easily cancel your account by sending the company a letter. However, credit card companies are not required to give you 45 days’ advance notice if they plan to cut your credit limit or close your account.

In another provision, you can now opt to avoid rate increases in the future and pay off your remaining balance under your present rate. Taking these options, however, will invalidate your card. In other words, you can no longer use your credit card once you notify the company that you want to avoid rate increases. You will also be required to payoff your remaining balance within five years. This implies that you may have to pay higher monthly dues in the next five years than you did in the previous years.

Taking Advantage

Analysts say that credit card companies are increasing their rates now while they still can. They are also increasing credit standards for new applicants and lowering the credit limits of current clients. Within this week, about 24 million card holders reported a cutoff on their limits. Even clients who have good credit scores saw cutoffs on their credit card limit. Another measure that credit companies take to maintain profit is by increasing transfer fees.
The CARD law may aim to protect 80% of the population who hold credit cards, but we still have to find out its full effects.

Writer: BValdehueza

Tags: accountability, advance notice, barak obama, credit card companies, credit card company, credit card policy, disclosure, last thursday, launch, minimum payment, next five years, notification period, previous years, provision, provisions, rate increases

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