What the Credit Card Reform Act Means for You
Have you heard of the Credit Card Reform Act of 2009? If not, read on, and let's hope your credit cards met their match
The Credit Card Reform Act took effect in May, 2009, and it's about time. For years, credit cards got away with ridiculous fees, sudden unannounced changes, and other unethical practices. The Credit Card Reform Act aims to stop some of these abuses, even if it can't singlehandedly revolutionize the credit card industry.
What is the credit card reform act?
The Obama administration introduced the Credit Card Reform Act in an effort to stop some of the grosser violations credit card companies commit, including:
Raising rates without notice
This part of the act means that banks have to actually tell you ahead of time if they're planning to raise your rates, not simply tuck a note into your statement mentioning that you now pay 39% interest.
The Credit Card Reform Act also limits when companies can raise rates, and it attempts to rein in some of the penalty fees kicking around out there.
Demanding more money
Banks and companies could increase your monthly minimum payment by as much as they want... whenever they wanted. If you carried a $3,000 balance and your minimum monthly payment went from 1.5% to 5%, that means your monthly payment shot up from $45 to $150! Under the Credit Card Reform Act, though, credit cards companies are no longer able to do more than double your monthly payment, and they can only do it once.
Crazy fees
This one isn't currently in the Credit Card Reform Act, but hopefully gets added soon. The government hopes to create a body to approve new credit card fees. It's difficult to issue a card right now because the credit card companies can come up with any fee they want. And it's hard to predict what their creative little minds might produce. This regulatory body would ensure that all fees were fair and reasonable.
Currently the Act prevents certain penalty fees. For example, over-the-limit fees and late fees must be reasonable and phone and Internet payments no longer incur a fee.
These are just a few of the abuses the Credit Card Reform Act hoped to curb. Is it working for you?
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