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Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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The Credit Card Holders Bill Of Rights…

H.R. 627: , The Credit Card Accountability Responsibility & Disclosure Act of 2009. A new law to stop many of the predatory practices of the credit card industry, strongly supported on both sides of the aisle and signed about six weeks ago by president Obama, imposes stricter rules on interest rate and fee changes. Some of the basics include…

– No longer allowing creditors to charge interest on the “double cycle billing” method.

– Putting a stop to interest rate increases during the first year after opening a credit card account.

– Ensuring promotion or “teaser” rates stay in place for at least six months.

– Making sure any increase in interest rate is only applied to new balances. Any previous balance on the card will be charged at the same interest rate it was prior to the rate going up.

– Issuers of the cards must now disclose at least 45 days in advance of any rate increases, three times the 15 day minimum currently in place.

– Should a cardholder’s rate increase due to late or missed payments they banks will no longer be allowed to keep the high rate in place should the user establish a stable payment history. In this case the new law requires the interest rate to go back to the lower rate being paid by everyone else.

That is the basics when it comes to interest rates. Over-the-limit and other fees have also been reduced greatly in the amount and frequency they can be charged. They are also major changes to billing and payment processing aimed at making sure certain credit card companies and banks (hello Criminal One, errr Capital One) can no longer hold on to payments on purpose to make them late in order to levy more fees and increase interest rates on their card holders…

All in all this seems like a very good thing. And over time it should help bring some of the predatory practices into line and make the credit card industry work like it should. But what will be the immediate impact? We shall see but already some of these companies are ramping up rates and fees on their best customers to prepare for the loss of income coming when the law goes into effect. A byproduct of bringing a generally unregulated industry back into line I guess???

 

`Greg :: Roseville Loan Expert

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