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July 3rd, 2010
02:32 AM ET

Credit Card Reform to Save the Day?

From financial analyst Clyde Anderson:

Credit card providers have been charging it to consumers for years, one might say. Before you ever swipe your card you may be subject to the; haven’t used the card before fee, you don’t have a large enough balance fee, you haven't used me in days fee or my favorite the didn’t swipe fast enough fee. Ok maybe I’m exaggerating, but not by much. Credit card providers are creating new fees everyday to offset the losses they are subject to with the Credit Card Reform Act (CARD). The Credit Card Accountability Responsibility Disclosure Act was implemented to curb the predatory practices that have contributed to the billions of dollars card providers collect annually in miscellaneous fees.

The purpose of President Obama's CARD ACT is to protect American card holders and end the days of unfair rate hikes and hidden fees. Beginning August 22, 2010, your credit card company is required to make some much-needed adjustments, but what will it really mean for you?

They Must...
Give customers at least 21 days to pay their bills
Provide a 45-day notice on major changes (rate hikes, fees etc.)
Only charge you one penalty fee at a time.
Cap late fees at $25

Still Can...
Raise rate if you’re late on other obligations
Can hike rates up to 29.99%
Raise rates above 29.99% if you have a variable rate
Switch you from a fixed to a variable rate at any time
Cut your credit limit by as much as they want and close an account without advance notice. (Even if you pay on time)

Can No Longer...
Automatically charge fees to consumers who exceed their limit
Raise rates on existing balances, unless they are 60 days late
Charge you inactivity fees or excessive late fees

The bottom line is banks will still be able to get around many of these rules, so consumer beware. Read the fine print, ask your credit providers questions, read any and all mail you get and never assume it’s junk.

Look for Clyde Anderson's Home School segments in the 7 o'clock hour of CNN Saturday Morning with TJ Holmes.

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soundoff (4 Responses)
  1. Butch From Southgate

    This is a good start to positive protection for credit card users. This is however weak. Like a hungry bear staring at a prime rib ...eventually that prime rib is going to be devoured. The banks are very much like the bear with it comes to the consumer. The consumer knows he's going to be devoured. The government is the limiting factor, holding the big bad bear back. The banks however, will find a way to get around all the barriers we put in place and it WILL get to that consumer one way or another.

    We absolutely and without doubt need to eliminate the credit card and fall back to debit cards. We need to severly limit the banks and regulate them to hell and gone. They are not your friend. Just remember the banks are the big bear and we are the prime rib ....nuff said

    July 3, 2010 at 8:41 am |
  2. michelehowe

    Are there cautions for those who pay off their cards every month? Guilty as charged in not reading the fine print because we always pay our cards in full...I'm wondering now if we should take the time to review those lengthy fine print letters?

    July 3, 2010 at 9:49 am |
  3. Kansas

    Save the day? Since the bill was past. My credit card companies have increased my interest rates from an average of 8% to an average of 18% and reduced my credit limits (on just 3 cards) by a total of $18,000.00. I always pay my bills on time and usually keep a small (if any) balance on my cards.

    Yeah, this bill sure helped me!!!!

    If it had been made effective immediately, there might have been hope. So the companies took advantage of prior notice of the rule changes to put the screws to people in advance so, now that the law is going into effect, they don't have to violate the law. They are where they want to be.

    August 22, 2010 at 9:38 am |
  4. Ben Franklin

    I'm a bit late to the comment party. But WHY do we need consumer protection on credit cards.

    It is not the government's job to protect the stupid.

    The only thing this new regulation has done is punish people like me who have always been responsible with their credit.

    My rate on my main card now has jumped from 7.25% to 11.5%.

    Not that it REALLY matters since I always pay off the balance, but in order to get back down to a lower rate, I will have to apply for it and pay a newly enacted fee of 50$.

    So thank you very much to all the people who bought the wide-screen plasma TV they couldn't afford and started to whine about it when they got whacked with fees and interest.

    August 22, 2010 at 10:02 am |