Posted by Madison on May 20, 2009
The Senate passed the new Credit Cardholders’ Bill of Rights Act of 2009 yesterday. After the new credit card bill is worked out with the house, and the President signs it, the changes take effect in one year.
Credit Card Bill of Rights
Here is a summary of the changes included in the new credit card bill:
- Bills can be paid online or over the phone without incurring a processing fee.
- Customers must be over 60 days late on payments before their interest rate can be raised on balances; if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
- Overlimit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway.
- If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first.
- Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card.
- Credit card statements must be mailed out 21 days before they’re due.
- Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own.
- Credit card agreements will have to be posted on the internet.
There is a lot of speculation about what this will do to rewards cards, and other credit card perks. I think we’ll have to wait and see!
In the meantime, you can read the full text of H.R. 627: Credit Cardholders’ Bill of Rights Act of 2009.
Source: Consumer Reports
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There is a lot of speculation that card companies will get rid of grace periods which only hurts their best customers. Given that I only use a charge card (ya everyone questioned why I pay for an Amex), it doesn’t affect me but does anyone think that the most credit worthy customers won’t adjust to changes in those tactics?
Most will end up just using their debit cards so Visa and Mastercard will be the ones that benefit from that. For better or worse this does mean a step back to less people having credit cards in theory. Some how I don’t think the 10 card issuers that hold 95% of all card balances will allow this to happen.
The legislative changes look good to me and are long overdue. Let us not forget that Credit Card companies make a percentage off every charge from the merchant, which is the reason that there are now Gift Cards, on which they likewise make $$. Too much greed on the part of credit card companies has led to the need for this. In light of the fact that we just bailed out the banks, etc., I think they should show a little more respect to the people who financed the bailout. That would be all of us here in the great USofA!!