DODD ON NEW CREDIT CARD PROTECTIONS TAKING EFFECT TOMORROW
First Phase of Credit CARD Act Requires Advance Notice of Rate Hikes, More Time to Pay Bills
August 19, 2009
HARTFORD, CT – Tomorrow, credit cardholders will see new protections established by the Credit CARD Act take effect. Signed into law in May, Senator Dodd’s Credit Card Accountability, Responsibility, and Disclosure Act cracks down on abusive, misleading and deceptive practices employed by some credit card companies.
“The new rules of the road established by the Credit CARD Act will shield credit cardholders from widespread abusive practices. New protections will give American families more time to pay their credit card bills every month, and time to shop around for a better deal if their rate is being raised,” said Senate Banking Committee Chairman Chris Dodd (D-CT), the bill's author.
Starting tomorrow, credit card companies will be required to:
· Notify cardholders 45 days before any interest rate, fee and finance charge increases on their accounts or other significant changes to their accounts;
· Give cardholders the right to opt out of interest rate hikes and fee increases and allow them to cancel their accounts;
- Refrain from treating a cardholder’s payment as late unless the statement has been mailed 21 days prior to the bill’s due date, rather than the current 14.
“These are important first steps for American consumers,” Dodd continued. “Unfortunately, some credit card companies are trying to squeeze their customers before the clock runs out on ‘any time, any reason’ rate increases. These companies will be held accountable for rate hikes when the full Credit CARD Act takes effect.”
Recent media reports indicate that some companies have been raising rates on customers before the full law goes into effect in February 2010. However, the Credit CARD Act includes a provision that will require credit card companies to review every six months any account where the interest rate has been raised since January 1, 2009 and reduce the rate if the customer has become less of a credit risk or the circumstances that warranted the increase are no longer present.
Last month, Chairman Dodd sent a letter
to the Chairman of the Federal Reserve and the heads of key regulatory agencies directing them to write and enforce robust rules to implement this provision and to notify all credit card companies under their jurisdictions that they will be held accountable for all interest rate increases during this time period.