You have probably read, heard, or seen on the news about the U.S. Senate passing legislation to protect credit card holders from the predatory practices of banks. For years consumers have had to deal with high interest rates, changes in rates with no reason or warning, universal default on all cards if you are late with paying one, high fees, etc. Now, Congress is listening.
On May 19, 2009, the Senate passed a bill 95-5 to curtail this activity, and the House is expected to follow suit. President Obama is also expected to sign it into law if it is brought to his desk. If it does become law, however, it would not give immediate relief, as it gives credit-card companies nine months to change their ways. What would this mean for you? Several things , including:
- credit-card companies will need to notify you 45 days in advance before increasing your interest rate.
- card companies will no longer be able to penalize you immediately for being late through a higher interest rate. Card holders will have a 60-day grace period before the lender can retroactively apply a higher rate to existing balances.
- even if this were to happen, you can get back on track. Card companies will have to restore the previous, lower rate once you have made your minimum payment on time for six consecutive months.
- those under 21 who want to open a credit-card account to first prove that they can repay the money - or that a parent is willing to be on the hook for their child's debt.
- No more universal default.
This is a good start, although credit card companies, being adaptable, will probably create new tactics to get around the rules. At least Congress is starting to listen to their individual constituents, rather than the bank lobby (which gave us a more onerous bankruptcy code in 2005). We will have to see how all of this plays out.