The Changes that Come with the 2009 CARD Act

Since the creation of the CARD Act or the credit card Accountability, Responsibility, and Disclosure Act, some of the new rules and modifications have already been implemented. The rest of the modifications will be implemented once the CARD Act is enacted this coming February 2010, though there is still that distinct possibility that the enactment would be moved sooner ¨C as early as December 2009 even.

The first batch of modifications, implemented August 2009, show how credit companies are mandated to notify their consumers of their plans of changing their interest rates or the fees related to credit card debt. Notifications to consumers have to be made 45 days prior to implementation of such notice. Another modification is that any significant changes that are to be made to any credit account should also be notified to the concerned credit cardholder 45 days prior to the implementation still.

Another change that consumers would most likely find refreshing is that with this 45-day notice comes the choice whether or not to go with the new interest rate or fee that the bank or credit card company is proposing. If a consumer chooses not to accept the new interest rate, then the credit card account will be moved for closure and the consumer can then pay off his or her balance at the old rate. While the consumer is paying off the balance, no additional charges are made on the card. Once the balance is completely paid off, the account will then be closed.

Credit card statements should also be mailed to their respective recipients 21 days or 3 weeks before their due date. The current practice is just 14 days or 2 weeks prior, which does not really give consumers ample time to prepare their payments. With the modification, there would be 7 extra days to ensure enough preparation on the part of the consumers.

Senator Chris Dodd from Connecticut is actually the one who created the legislation. Dodd shares just recently that the new rules that come with the CARD Act are designed to protect credit cardholders from the abusive practices that credit card companies have been undertaking. The new modifications, which will be implemented February 2010, will surely enhance consumer protection even more.

Most of the rules that will be implemented next year are geared towards the younger consumer market. With the modifications, for instance, you need to be over 21 years old if you want to apply for a credit card on your own. If you are under the age of 21, then you will need to have a co-signer with you when you apply for your credit card.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.