How the Credit Card Act of 2009 Helps You

If you’re sick of the credit card companies’ high-handed tactics, you’re gonna love the Credit Card Act of 2009.

Few people took much notice when President Obama signed the Credit CARD Act of 2009 into law back in May of 2009, but they’re starting to pay a lot of attention now. The new Act acts aggressively to rein in what most people see as the excesses of credit card companies and related financial institutions.

The changes went into effect in late February 2010. Noticed them yet? Bet you have.

The nitty-gritty

Among other things, a minimum payment warning must be included on each statement, making very clear the penalties for paying the minimum payment each month. Usually, that means stretching your payments out for an unconscionable length of time, while the card issuer collects substantial interest.

Strict rules have also been set in place to limit how and when the companies can issue credit cards to people under 21, as well as those with bad credit. The companies are really howling over that one. It’s as if they want people to default on their balances…

…Which they do, because that was a prime excuse for suddenly raising rates in the past. But oops, they can’t easily do that anymore, either.

In fact, they can’t change any of their terms without letting cardholders know at least 45 days in advance. That’s why you’ve been getting all those letters about term changes lately.

But wait, there’s more!
This new credit card reform act is an unusually juicy one, with many helpful aspects.

For example, interest rate changes are limited in a variety of ways, and the issuers can no longer send you a bill less than a week before the payment is due. They have to give you at least 21 days, and payments must be accepted at least until 5 PM on the due date.

And here’s something you may not have realized they were doing before: double-cycle billing. This means that they determine interest rates based on what you bought two months ago rather than last month. This is why sometimes when you paid your full bill, you were still hit with an unexpected finance charge.

Can’t do that anymore, hallelujah!

There’s a lot more to say about the Act than we have room for here, so I recommend that you look into the recent two-part write up by my buddy, the Credit Card Whizkid. He’ll let you in on just about everything there is to know about the shiny new Credit Card Act of 2009.