President Obama Signs Credit Card Accountability, Responsibility and Disclosure Act into Law

It's official! President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) this afternoon and set into motion a 15-month roll-out plan:

August 20, 2009
The first set of changes happens this August with the implementation of two big timing reforms. Consumers will get 45 days' advance notice of any significant credit card term changes. They will also get 21 days to pay their monthly credit card bills.

February 22, 2010
The biggest set of reforms are set to go live early next year. This batch includes the ban on retroactive rate changes and double-cycle billing. Plus, the changes in February will include new rules concerning the worst fees (over-limit fees, late fees, and foreign transaction fees) and restrictions on credit card access for people under age 21.

August 22, 2010
This final batch of reforms includes the 6-month "make-good" policy (allowing borrowers to earn back their old APR with six months of on-time payments). The August 2010 wave of reforms also includes the gift card rules that will make all gift cards valid for five years and will limit fees on such cards.

Remember: None of these protections go into effect immediately, and your credit card company is still free to continue their current policies until August, when the first changes will take effect. 

Which part of the reforms are you most excited about? Which parts do you think will do more harm than good? Share your opinions and questions about the Credit CARD Act in the comments below or in our credit card forum.

Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider, Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[Nancy Irving]

I am concerned that the card companies are already raising interest rates, pre-emptively as it were, and will no doubt continue to do so on most cardholders who run a balance, up until the date of the change, and the new law will apparently do nothing about this.

Also, your precis makes it sound as if interest rates are only raised when the cardholder has committed some infraction. This is not the case.

As an example, a Bank of America card I have had since 2005 recently sent me a letter saying my interest rate on purchases was being raised from 10% to 26%.

I have checked my credit report and it correctly shows that I have never been late or over limit, on this or any card or other account. Moreover I have in fact been paying down the balances on my cards over the past couple of years, so my credit profile has actually significantly improved over the past several years. Thus there is no reason for the rate increase, other than that the card companies want more money.

B of A gave me the option to decline the change and close the account, which I did; but my understanding is that since the account still has a balance the issuer can legally increase the interest rate on that balance if they wish, for any or no reason, and that if they do so before the law on retroactive interest-rate increases takes effect, I will have no recourse.

I fear that the card companies will simply raise everybody's interest rates to 30% (or higher, why not?) in advance of the change, leaving those of us who cannot pay off our balances immediately in a bad position.

From what I read on the internet, this has already happened to many people.

Thus, while I am strongly in favor of the new law, I fear that many, especially those who have the fewest options, will end up paying unfair rates on current debt.

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Credit card companies have made tons of money and have had their way with consumers. Hopefully these changes will level the playing field.