On August 20, 2009 two protections went into place thanks to the CARD Act. Several more protections will go into place in February 2010. The CARD Act was designed to protect consumers from credit card companies. And while many of the provisions help consumers, the act fails miserably to address some of their key complaints.
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Thanks to the Credit CARD Act, if your issuer makes a major change in the terms on your account, such as raising your interest rate, you’ll have the opportunity to opt out and pay off the card at the old terms. (I’ve described how this works in a series of blog posts this week.)
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As of today, August 20, 2009, credit card issuers will be required to start giving at least a 45-day notice about interest rate increases on consumer credit accounts. There is substantial confusion regarding when credit card issuers are required to give you the newly requisite 45-day notice.
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This week, I have been detailing the first round of Credit CARD Act changes that go into effect this month. One of the reasons this law passed was due to the outcry by tens of thousands of consumers who complained that issuers had unfairly raised their interest rates. Some saw their rate go up through no fault of their own, but others were due to a misstep: Paying a few minutes or few days late, or going over their limits, for example. These are commonly referred to as “penalty rates.”
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In what I’ve described as the “sneak previews” to the main event, two provisions of the CARD Act become enforceable August 20. These provisions are both specific to amounts of time consumers have to pay their bills and expect notice of changes to their credit card accounts.
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The Credit CARD Act changes that go into effect on August 20, 2009 are small potatoes compared to the major changes that will take place in February of 2010. In fact, the Federal Reserve Board summarizes them in just three bullet points on their press release.
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For purposes of the new Credit CARD Act, the fact that your issuer closes your account or lowers your card limit is not considered a major change in terms that requires 45-days advance notice. Here’s what the Board said about this:
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The first consumer protection provisions of the Credit CARD Act go into effect August 20, 2009. Here is what is happening:
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