Credit Card Rules Make it Through the Senate
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New credit card rules have been passed by the Senate. They still have to go to the House, before heading to President Obama’s desk, but they are well on their way. It appears that this is the year for credit card reform. The rules passed by the Senate go beyond what was proposed by the Federal Reserve last December. Here are some of the basics of the new credit card rules:
- Gift cards must have a 5-year life.
- Bills must be sent 21 days prior to the due date.
- Changes to terms must be sent to consumers 45 days in advance.
- No retroactive changing of the credit card interest rate unless the account is 60 days delinquent.
- Over the limit fees can no longer be charged.
These binding rules would be a definite change from the non-binding Credit Cardholders’ Bill of Rights, which no major credit card issuers observe. Consumers have been seeing increasing fees, and reductions to their lines of credit. It is also likely that credit card issuers will be on the war path until this bill takes effect in 9 months (assuming it passes). Those with poor to fair credit (and even some with good credit) can probably expect to see their interest rates and fees go up now, as credit card companies scramble to take all they can get.
Also interesting — those who are under 21 will have a more difficult time getting credit cards. Indeed, a co-signer may be necessary in some case. These efforts at making credit more consumer friendly may actually make less credit less desirable to consumers. But that’s not necessarily a bad thing. Forcing credit card reform may encourage the rest of us to look at card policies and our financial practices. If credit becomes less desirable, then consumers are more likely to practice solid financial planning that will help them better prepare for the future. This may be just thing to wean us off our dependence on debt.
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May 20th, 2009 at 11:55 am
[…] version of the bill, compromise is expected, and there are hopes that President Obama can sign the credit card bill by Memorial Day. The stock market doesn’t appear to really care about the news; investors are […]