First Part of New Credit Card Laws Take Effect

Portions of the Credit CARD Act of 2009 goes into effect today. The much discussed credit card reform passed this year seeks to ban certain unfair practices and provide cardholders with clear and understandable terms.

In May, President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act (Credit CARD Act) into law.

The new rules come into effect in three waves. First, on August 20, 2009 rules regarding disclosure of contractual changes and when companies can count payments as late go into effect. Most of the Act's new protections go into effect in February of 2010, and a few provisions take effect in August of 2010. For the full list of reforms and when they take effect, see this Treasury Department memo summarizing the changes.

The following new rules begin tomorrow:

• Advance notice of rate increase and other changes is required. Now, card companies must give 45 days notice of changes to the annual percentage rate charged, and of other significant changes in the terms of the credit card agreement. Examples of such changes include increases in fees or finance charges.
• Notice of contractual changes must include notice of the right to cancel. When cardholders get notice of changes to their cardholder terms, they must be allowed 45 days to cancel the agreement. Such a cancellation cannot be deemed a default by the card issuer. The issuer also cannot force cardholders to pay off their entire balance should they cancel.
• Payments may not be considered late unless statements are mailed or delivered at least 21 days before the payment due date.

If you want see how (and whether) your credit card company is complying with the new rules that will eventually face all cards, check out BillShrink's page on which cards comply with the credit card bill of rights.

• Factsheet: Reforms to Protect American Credit Card Holders (whitehouse.gov)
• Consumers to benefit as credit card law debuts (Reuters)
• Are There Loopholes in the Credit Card Act? (Wall Street Journal)
• Credit Card Debt Relief (provided by Law Office of Thomas P Hogan Attorney at Law)