The Credit Card Act of 2009 was signed into law earlier in the year and has roll-outs which started in August of 2009. The new credit card laws are aimed at limiting the power that creditors have over their debtors. The new rules set forth in the Credit Card Act of 2009 are part of a new legislation in which the United States government is trying to help consumers reduce their debt and give them more control over how their debt is managed.
Here are some of the new credit laws enacted by the Credit Card Act of 2009:
New Age Restrictions on Credit
The Credit Card Act of 2009 lays out strict regulations on issuing credit to youths under the age of 21, while also restricting the marketing capabilities of credit card companies to these youths. A research study done by the Credit Research Center in 2002 indicated that young adults that were not attending college carried roughly $3,500 in credit card debt; while the average older adult carried roughly $7,500 of credit card debt.
The new credit card laws indicate that anyone under the age of 21 is not eligible to obtain a credit card in their own name unless they have a co-signer or can provide sufficient proof of income making them eligible to carry such debt. The age restrictions set forth by the Credit Card Act of 2009 are meant with the intention of deterring young adults from accumulating excessive amounts of debt until they are financially capable of managing credit card debt.
Minimum Payment Awareness
Before this new credit card law went into effect, credit card companies were not responsible for notifying their debtors of how long it would take to repay their debt. Consequently, many consumers were not aware of the debt cloud swirling around them and were in the dark about exactly how long it would take to repay their debt making only the monthly minimum payments.
What the new credit card law does is forces creditors and lenders to make their clients aware of their individual time frame for repayment of their debt. Credit card companies are now required to make the debtor aware on every billing cycle of approximately how much time it will take them to pay back their debt if they consistently only pay the minimum monthly payment.
No More Double-cycle Billing
Double-cycle billing was the previous method that most credit card companies used to calculate the interest owed on an account. Double-cycle billing would allow creditors to use purchases made during the previous billing cycle as a means for computing finance charges due in the current billing cycle.
This act of double-cycle billing was disastrous to consumers because they were required to pay the finance charges of the previous billing cycle even if they had already paid their bill in full. Double-cycle billing was a means for credit card companies to double-dip on their debtors and it is now banned under the Credit Card Act of 2009.
To read the first part of this article click here.
References:
Govtracks.com
Credit Research Center
MoneyCentral.msn.com 'What the new Credit Card Law Means for You'
Jennifer Williams - Jennifer is a full-time mother with a passion for writing and is currently a medical transcription student at Everett Community College. ...
