About 75 percent of US banks will not comply with new rules in the recently-enacted Credit Card Accountability, Responsibly and Disclosure (CARD) Act, a law that regulates card issuers on increasing and imposing fees.
In a survey conducted by the Federal Reserve, most banks and credit companies claimed they are not yet ready to comply with this new regulation until February 2010.
On the other hand, the 25 percent assured the federal agency that they will be ready to comply with rules by the end of 2009.
In a different survey conducted by the federal agency, it found out that 15 percent of banks and financial companies have employed stiff rules for credit card accounts.
About 45 percent bank-respondents admitted they are planning to increase minimums for credit scores, and 40 percent are contemplating to raise contract rates and fees once the new credit law is implemented.
The credit card reform act was signed into law by President, Barack Obama, on May. The law was supposed to implement on February next year to give banks and financial institutions more time to alter their policy that is congruent to these new credit card regulations.
Before implementation of the law, card issuers have rushed in changing and rewriting contracts. It allowed the credit companies to raise interest rates, apply penalty fees for late payments or over-limit transactions. They also massively reduced consumers' credit lines and closed inactive accounts.
The banks' actions have prompted Congress to pass a bill, expediting the implementation of new regulations on credit. The new card law will now take effect on December this year.
Once implemented, Jeanne Hogarth, Federal Reserve Board manager division, advised cardholders to read every mail they will receive from their credit companies to ensure that their rights are not being violated.
Some of the rights in the card reform act include, consumers have the privilege to reject the rate increases, especially when they are paying balances. Consumers should be notified 45 days before changing interest rates. Moreover, banks are also prohibited to apply double-cycle billing.
Under this same rule, credit card companies shall require a co-signer before approving the application of a consumer who is 21 years old or below. Card issuers are not allowed to solicit on school or near campuses. The Board of Regents must by notified by universities with any agreement it enters with credit card firms.
The law encourages the low introductory rate to students applying for a card, but it prohibited banks and card issuers to give gifts, such as T-shirts, mugs, caps to minors.