President Barack Obama takes the first step towards consumer protections by signing the new credit card law on Friday. The provisions stated in the new law take effect as early as August.
The president informs the public during the signing ceremonies in the White House that the new bill is created to put in place some common sense reforms. He was accompanied by key Congress members who helped create the legislation, during his signing. It is believed that the Credit Accountability, Responsibility and Disclosure Act of 2009 contain most drastic changes in the marketing, advertisement and management of credit cards. The rules stated in the new credit card act are regarded to be the toughest for credit card issuers have to face in decades.
No longer can credit card companies increase their interest rates on existing balances any time they wanted to. More so, the law also gives consumers and credit card holders who have been good in paying their bills on time and those who have been given interest rate increases for six months, the right to reduce their annual percentage rates to previous levels.
The new consumer protections will take effect over the next fifteen months. The earliest time its effects are felt by consumers and creditors alike is August 2009. Beginning this month, credit card providers should already be on their way giving out notices to their clients about the different changes in their terms and conditions. August 2009 also marks the end of the 21-days given to consumers to pay off their monthly credit card bills.
However, the new credit card law will only completely take effect on February 2009. This means that consumers would have to wait until their providers get limits on when to introduce interest rate hikes, until they universal default and universal default get banned, and until minors get restricted in applying for credit cards.
In fact, the timing of when the new law takes complete effect was one of the greatest contentions during the Congressional debate on the bill. Consumer advocates argued that it was too long a time of waiting. There are already too many families struggling during the recession which needed help sooner. On the other hand, the bank lobbyists did their best to push the date further to implement changes in billing, operations and computer systems to adjust to the requirements of the law.
Not until August 22, 2010 would credit card holders who have kept clean records in payments for at least sic months have the right to ask for their annual percentage rates and interest rates be brought back to the previous levels. Also, gift cards being valid for five years and fees being reasonable would only happen by August 2010. Some of the things included in the new law overlap with Federal rules already approved. Not all of them though apply to similar practices. Federal rules will take effect on July 2010.
The new credit card law obviously works to protect consumers. President Obama stated that the regulations are especially for those who have clung credit cards only to find out that they can be the cause of financial burdens. He advises the public that though the new law would be of much help in how they manage their finances, it doesn't mean that it is an "easy pass". "We expect consumers to live within their means and pay what they owe," the president said.