Despite the devious strategies of the creditors, the Credit Card Reform Act of 2009 is in fact the first serious federal consumer rights legislation in more than a generation and implements major and significant reforms to the consumer credit card business itself imposes far reaching new restrictions regarding the way credit card companies conduct business with you, their customer. with their customers.

The new law only went into effect February 1, 2010. So it does not help much with what has happened to you in the past with your credit cards. However, there are some significant changes which are going to help going forward:
 
Increases On Credit Card Interest Rates

Furthermore, any credit card promotional period must be at last least six-months long to prevent credit card companies from “bait-and-switch” on new credit card customer by offering one low rate to lure cardholders into accepting the card and then switching that rate without reasonable notice a few weeks or months later will no longer be legal.

The new reform also provides that interest rates on new credit card purchases are allowed to increase only after the cardholder has had the credit card for at least twelve months. After that time, the card company can increase the interest rate, so long as they provide the cardholder with at least forty-five days advanced written notice of the change.

The purpose behind requiring card companies to provide their cardholders with additional advanced notice before making major changes to their credit card terms is to allow the cardholder to have additional time to pay off the balance before the changes go into effect, cancel the card or execute a balance transfer to a new credit card company. Gone are the days when a credit card holder gets trapped into paying higher rates without first receiving reasonable prior notice of those changes.

Minimum Payments - New Limits on Fees and Penalties

Some experts say the most significant protection in the new law is that it prohibits excessive fees and penalties when consumers fail to make timely minimum payments on their monthly credit card bills. Under these conditions, if the cardholder fails to make at least the minimum payment for a period of two months, the credit card interest rate must go back to the original lower rate, rather then being hiked-up to a rate that is punitive and excessive for the cardholder.


Credit card companies are also prohibited from using an earlier billing cycle when calculating the amount of interest to be charged for the current billing cycle. And finally, consumers who make phone and Internet payments to online credit card attendants are no longer required to pay a separate fee for using these services.

Payment Due Dates – Late Fees

Consumers have complained about arbitrary and unfair payment due dates that change without giving the cardholder prior warning. These practices have ended-up giving the consumer less time to pay the bill and a higher chance of incurring a late fee.

Credit Card Companies Will No Longer Be Able To:

a) impose fines and penalties through their use of "gotcha" time-traps such as arbitrary cut-off times for payments to be mailed or received because the new law requires that all deadlines that are set before 5 p.m. on the payment-due date will be per se illegal.

b) Subject their customers to penalties or late fees Payments due at those times or on weekends, holidays or when the card issuer is closed for business.

c) increase credit card interest rates on existing credit card balances unless the cardholder is more then sixty-days delinquent, the cardholder is already under a variable rate, or the credit card company’s promotional rate has expired.

Credit Card Companies Must Now:

a) disclose to their cardholders the exact consequences of making only “minimum payments” on their credit card balances.
 
b) inform the consumer exactly how long it would take to pay off the balance should the consumer only make the required minimum monthly payments.

c) Provide information on how much credit card customers must actually pay each month if they want to pay off their entire balance over the course of a few months.

d) Post and fully disclose their credit card terms on line, along with any rules or special requirements concerning time limits or payment deadlines, thereby clarifying the terms and conditions of using certain types of credit cards.

e) Impose late fees and over-the-limit penalties which are both reasonable and proportionate to the cardholder’s actual violation of terms.

f)      Increase interest rates on balances that you already owe – at least for the next 60 months.

g) Give you at least  45 days of advanced notice before raising rates and the new rates will only affect new purchases.

h) Apply payments made over the minimum to the balance of the highest rate so you pay it off quicker.

i) Charge fees for making payments by phone provide information on your monthly statements showing how much interest you are paying and how long it will take to become debt free with your current payment.

j) Provide less than at least 21 days after receiving a bill to make a payment

k) Trap students with credit card debt early in life because students will now have to prove that they have sufficient funds to pay it off or family willing to co-sign.

For information on debtor’s rights, credit reports, repossession, bankruptcy and credit counseling options, contact us now at the Credit card defense Center: info@creditcarddefensecenter.com