Washington, D.C. – This week, the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which Rep. Heath Shuler (D-Waynesville) cast his vote for in April, went into effect. Commonly referred to as the Credit Card Holders’ Bill of Rights, the laws significantly change the way credit card companies operate to impede unfair, deceptive, and anti-competitive credit card practices and protect consumers. Now that the rules are in effect, consumers will see "reasonable" penalty fees, steadier interest rates and clearer billing statements.
“Implementing the Credit Cardholders’ Bill of Rights will positively affect the financial security of every American who owns and uses a credit card.” Rep. Shuler remarked. “For far too long, American families have struggled to understand and manage their credit. Previously, Congress did not do enough to protect and assist families in their efforts to be fiscally responsible. This legislation protects consumers and gives American families the information they need and deserve to make smart financial decisions.”
The Consumer Federation of America and Credit Union National Association (CUNA) conducted a survey and found that “85 percent of consumers reported planning or taking action when aware of a rate hike, new fee, lower credit limit, fewer rewards, or other disadvantageous terms,” said CUNA Chief Economist Bill Hampel.
"For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs," President Obama said in a statement. "But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable."
The bill was passed by the House of Representatives in April, and signed into law by the President in May. Among other protections, the legislation requires 45-day advance notice for account interest rate and fee increases. Previously, card companies could raise interest rates on customers if they paid unrelated bills, such as utility bills, late. This bill prohibits that, and prohibits penalty rate increases for those less than 60 days overdue on their payments. Previously, card companies charged exorbitant over-draft fees. This bill prevents them from charging over-limit fees unless customers have given prior permission to process transactions that would put their accounts over the limit. Additionally, the rules require card companies to mail bills at least 21 days prior to payment due dates. A study conducted by Pew Charitable Trusts found that prior to these rules being put in place, retroactive interest rate hikes and penalties for late payments cost Americans more than $10 billion annually.
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