Church of the Customer Blog
« 10 new rules for credit cards | Main | The roots of word of mouth »
June 04, 2009
10 new rules for credit cards
Since a large, taxpayer-bailed-out bank recently doubled the interest rate on my credit card without notice and tightened the fluctuating payment period to something like six hours, it seems highlights of the Credit Cardholders' Bill of Rights Act that President Obama signed into law the other week are worth sharing and spreading:
- Prohibits retroactive rate increases unless the cardholder is at least 60 days behind in paying the bill. If a person does fall behind and the rate on past buys is increased, lenders must restore the lower rate after six months if the cardholder has paid monthly bills on time.
- Requires lenders to post their credit card agreements on the Internet and customers must receive 45 days notice before interest rates are increased.
- Requires anyone younger than 21 to prove that they can repay the money before being given a card or have a parent or guardian promise to pay off their debt if they default.
- Prohibits over-the-limit fees unless a cardholder elects to be allowed to go over a limit.
- Requires lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made.
- Requires that gift cards remain valid for five years.
- Bans "pay-to-pay" fees, which are charged when someone pays the bill by phone or on the Internet.
- Requires banks to give customers a reasonable time, such as 21 days, to pay the bill before it is considered late. Due dates must be the same date every month.
- Requires banks to give customers 45 days' notice before raising interest rates on new purchases, even if the customer is late or delinquent in paying the account.
- Prohibits retroactive rate increases. Does not include a provision that would require lenders to reduce the rate after six months if the person pays on time. Also would prohibit double-cycle billing.
Other blogs that reference 10 new rules for credit cards:
Whoa! thanks for posting this.I'm having a hard time finding ANYTHING wrong with these new rules.
I've recently dealt with something similar myself. I'm glad you decided to write about and spread the word. Thanks!
That's a useful sounding list of rules. Now, there's enforcement.
Is there a rule regarding consumers settling delinquent accounts such as "has to be 5 mo. delinquent before the credit card company will negotiate a settlement payment"?
Image -- And those are just a handful of the new rules. They're a start. Maybe even stronger ones will be added in the next year or two.
Tracy -- Since we're basically captives to a credit-card economy, it's my pleasure.
Dan -- So true. For so many of the past few years, enforcement budgets were cut or led by anti-enforcement people. I hope that changes.
Linda -- Not sure about that. That might be a good question for someone like financial experts like Suze Orman or Scott Burns.
So if I own a credit card company, the government now has the right to tell me how to deal with my customers. Sounds great!
Wouldn't a better solution be for the customer to just wake up and realize that credit is bad and savings is good. Of course, how can we expect individuals to understand this when our own government doesn't understand it?
I'm sure all of you would be just as happy if the government invaded your own industry and forced prices on your service or good. Fascism is great!
Ron -- Fascism? You mean that system of authoritarian, one-party rules where rights of the common person are rejected and the weak must be vanquished? Where there are no allowances for criticism (like yours) and how capitalism is to blame for the world's ills?
Please.
The rights of a person to cancel a credit card have never vanquished. The rights of a person to lower his debt has never vanquished either. Credit card companies don't force anything on anyone. Much like the radio, you can switch channels anytime you wish.
Allowing government to control rates within an industry is the last thing we need. You can bet that we'll see unknown, unintended consequences as a result of this action. Of course, more government intervention will be required at that time as well.
Try buying something online without a credit card. The vast majority of stores won't accept a check. Going off the credit grid is unrealistic and impractical for the vast majority of Americans to buy and/or sell goods and services.
PayPal works. Debit cards work too. And maybe, just maybe - this country needs to stop buying so much with its credit cards. Maybe we NEED to have high interest rates on our credit cards.
Forcing mandates on a private business is far from true capitalism. But in the end, capitalism will be blamed - not the government mandate that forced the unintendend consequence.
Ron, I agree that people have gone overboard using credit cards, but the high interest rates have not stopped them so far. Sadly, most people, I said most not all, have no problem staying within their limits when using a debit card, but they refuse to look at a credit card the same way.
Why do you need those rules? Throw credit cards away. Yes.
