The Credit Card Accountability, Responsibility and Disclosure Act

The Credit Card Accountability, Responsibility and Disclosure Act

In an effort to boost profits and recover from massive credit losses, the nations credit card companies began to charge excessive fees and arbitraraly raise interest rates to as much as 30%. Credit lines were cut and accounts that had no balances were closed. This has many Americans angry since we are giving the banks billions in bailout funds and they then sock it to the public with usury interest rates and fees.

Congress passed "The Credit Card Accountability, Responsibility and Disclosure Act" that ends some of the most egregious practices of the nations credit card companies. President Obama will sign the bill into law today. Rarely does Congress do something that has such a beneficial effect for the public. It is about time.

The important provisions of the bill:

Credit card companies must give 45 days notice before increasing fees and raising rates and finance charges.

If you are offered "teaser rates" (low initial interest rates) they must stay in effect for 6 months.

When the credit card company increases your interest rate, it will only apply to new purchases not existing balances (assuming your not 60 days delinquent). This is huge.

Banks must send out your bill no later than 21 days before the due date.

Principle payments will be applied to the balance with the highest interest rates first, prior to the new law it was applied to the lowest rate balance.

Limits on how people under 21 are offered credit cards. . For adults less than 21 years old, they can only apply for a card if they can prove income, and their credit limit is capped at 30 percent of that income. I love this provision. Young adults are indoctrinated into debt addiction at a young age and it reamins a problem the rest of their life.

Universal default, which raises the interest on your credit cards if your late on payments such as utility bills and car payments is prohibited.