Good news for Credit Card Holders! Change is coming!

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On May 22, 2009, President Barack Obama passed the “Credit Card holders’ Bill of Rights.” This milestone measure received bipartisan support in both chambers and will make credit card issuers display fees more clearly and end many random abuses. This bill takes full effect on February 2010.

Once the bill is effective, credit cardholders should experience a more consumer-friendly experience when the credit card industry is required to play by clear and fairer rules.

The Credit Cardholders’ Bill of Rights will help credit card users by:

■Restricting issuers’ ability to raise rates on existing balances.
■Requiring 45 days notice before raising interest rates on new balances.
■Requiring that payment amounts above the minimum payment be applied to the highest interest rate balances first.
■Allowing over-the-limit fees only when a borrower affirmatively consents to having over-the-limit transactions approved.
■Requiring that fees be reasonable and proportional to the violation of terms.
■Prohibiting issuers from charging consumers a fee for paying a bill by telephone or over the Internet.
■Requiring credit card statements to be mailed 21 days before the bill is due rather than the current 14 days.
Unfortunately, Obama’s new law does not put a ceiling on the level of allowable interest rates or the amount of the rate increases that are allowed. There is no provision to address the industry practice of reducing credit limits at any time for any reason, or the continued insertion of forced arbitration clauses (that prevent a cardholder’s dispute being heard by a jury in court) in almost every credit card agreement.

Credit card usage is vital to America’s financial recovery and these extra protections are much needed. Families rely on credit cards to help pay bills, buy groceries and make ends meet in today’s troubled economy. Allowing unfair credit card industry practices to go unrestricted would have a harmful effect, just as toxic mortgage lending practices have done.

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