How do the new credit card laws affect you?
Consumers who have been making at least minimum monthly payments on their credit cards may be curious about how new changes in the law might affect them. Regulations restricting credit card issuers go into effect on February 22, 2010. Credit card companies are constantly monitoring the credit reports of their customers and would increase interest rates based on overall credit scores. While this new law will not completely eliminate increases in interest rates, their ability to increase interest rates on existing balances would be limited. The rates would only increase in cases where a promotional rate ends, the card has a variable rate or the cardholder makes a late payment. Interest rates on new transactions can only increase after the first year. In addition, interest rates on existing balances cannot be increased because of “universal default” on other credit accounts prior to forty-five days of notice.
While interest rates themselves would not be limited, the restrictions on rate increases might cause card issuers to make demands on payment sooner and therefore force their account holders into bankruptcy. Cardholders are also given under the new rules at least twenty-one days to make payment before incurring default. Card would have to enabled to allow for over-limit spending, which would otherwise be prohibited. Card applicants under the age of twenty-one would be required to have an adult co-signer on their account if they lack the income to make regular payments.
Basically, the new law just means that credit could be harder to come by and also incentivizes people to pay off their balances quicker rather than postponing their agony and thereby allowing the interest rate to ride up on their existing balances.
Disclaimer: This does not constitute legal advice. Please consult a qualified bankruptcy practitioner in your jurisdiction on how and if the above law may affect you.
