Merry Christmas!! CARD Act Compliance Could Be Moved from February 2010 to December 1, 2009

In a move that shocked just about everyone, Congresswoman Carolyn Maloney announced Wednesday that she would push to have the CARD Act provisions that were set to take effect in February 2010 moved up to December 1, 2009. There are many questions swirling about this news. The most common ones are addressed below.

Why do lawmakers want to move the effective date from February 2010 to December 1, 2009?
There are really only two explanations for moving the date up by almost three months. Lawmakers are punishing credit card issuers for violating the spirit of the law by continuing their reign of terror over their cardholders. Or, lawmakers knew all along that they were going to try and move the date up to December as a way to get double the PR value for the new law (new law to protect consumers…and we’re going to move up the protections now.)

How is this going to impact consumers?
Consumers will begin enjoying the protections earlier than planned, which is marginally valuable considering millions of consumers have already seen their terms adversely changed. This will ensure that consumers won’t be able to charge over their credit limits during their holiday shopping. It will also ensure that new charges incurred in December won’t lead to higher interest rates in January. It will also prevent the under-21 crowd from opening retail store credit cards while they’re at the mall during December. This is all bad news for card issuers and good news for consumers.

How is this going to impact credit card issuers?
In addition to a lot of denied vacation requests, this really impacts the credit card issuers in the wallet. If the CARD Act provisions go live on December 1st, there will be limited over-limit fee revenue generated for credit card issuers during the holiday shopping season. The CARD Act requires that consumers “opt in” to allow for over limit transactions. Without the opt-in, the credit card issuer must deny any transaction that would put the cardholder into an over-limit position.  

Credit.com will continue to provide updates and analysis as this story evolves.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.