The "The Credit Card Holders' Bill of Rights- has passed both the House and Senate and was signed into law on May 22 by President Barack Obama.
Coupled with regulations recently issued by federal bank regulators, the "Bill of Rights- makes sweeping changes to the credit card industry beginning in July 2010. The idea is to make the process of applying for, and using, credit cards more transparent, while at the same time curbing unfair and unscrupulous practices in the industry.
For example, credit card companies will be required to give you 45-days' notice before raising your interest rate, and then must give you an opportunity to opt-out of the increase before it takes effect. No more sudden interest rate hikes without notice. You will also have the right to set a maximum limit for your credit line. Hopefully, this will stop those sneaky over-the-limit fees that can cost you big bucks before you realize the problem.
One of the biggest changes is that credit card companies will no longer be able to judge you based upon your payment history with other creditors. They will only be allowed to consider your payment history with them. The days of "universal defaults- will be over.
Credit card companies will also have to consider your payment timely so long as it is received by 5:00 EST on the due date, and you will be entitled to get your bill at least 25 days before it's due. This will make it a lot easier to avoid the traps the companies have set up to catch you in a late payment.
Another important change is that the credit card companies will no longer be able to simply apply your payments to the balances with the lowest interest rates. Some of your payment will have to be applied to the higher interest rate balances.
Not surprisingly, the credit card companies are not happy about these developments. In fact, over the past several months, as the bill moved through the House and Senate, many banks declared open season on consumers. Credit card companies have increasingly become more aggressive with borrowers: raising interest rates, cutting down credit limits, and taking away other benefits when payments are just a few days late.
Case in point, Bank of America -- one of the largest and most powerful credit card issuers -- recently raised the interest rates for 14 million of its customers. And, it's not that these 14 million people suddenly turned delinquent. BOA applied the rate hike to customers who have never been late in their payments -“ to BOA or any other creditor -“ and who have great credit scores. Apparently, BOA decided to institute a hike across a broad base of consumers, regardless of their actual creditworthiness.
These sorts of moves may help the banks pad their pockets in the near term before the new regulations go into effect. But on the flipside, they create an even higher risk of default for borrowers -- many of whom are already struggling to maintain the status quo in tough economic times.
The much-needed change in the credit card industry is coming. In the meantime, you can expect credit card companies to keep taking advantage of the current loose regulations. The good news is, if you're already drowning in credit card debt, relief is available right now. Call a bankruptcy attorney and learn how you can get rid of these burdensome debts and make a fresh start.
In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.