Consumer protection against deceptive collective practices for credit card debt is an important issue especially in today’s economic climate. The Credit Card Accountability, Responsibility and Disclosure Act (otherwise known as the Credit Card Act of 2009) which was signed by President Obama this past May was designed to prevent abusive practices among credit card issuers.
For instance, it imposes a freeze on interest rates for canceled cards; prohibits issuance of a credit card on behalf of a consumer under age 21 unless the consumer has submitted a written application meeting specified requirements; sets limits on fees and interest charges, including a prohibition against penalties for on-time payments to name a few. A key element is that it bans retroactive rate increases. In other words, it bans rate increases on existing balances due to “any time, any reason” or “universal default” and severely restricts retroactive rate increases due to late payment.
Keep in mind that there are certain loopholes. The average rate offered to a consumer with a solid 700 credit score is now 11.51 percent on a variable rate card, up from 10.66 percent in March, according to Bankrate.com. A report released last week found that 100 percent of credit cards offered online by the largest 12 bank issuers in the United States continue to include practices that will be illegal when the Credit Card Accountability, Responsibility and Disclosure Act, passed in May, takes full effect next year. Starting in February, there are certain practices that will be illegal one of which is the increase of interest rates for fixed rate cards for reasons other than a credit card holder being more than 60 days late on payments. The way credit card issuers will get around it is to convert your fixed rate credit cards to variable rates ones before February. There are certain disclosures the issuers have to provide when they do this so be on the lookout.
Make sure you understand your rights under this law and other Federal laws designed to protect consumers. If you think your rights have been violated, contact an attorney.
Disclaimer: The posting of this information does not in any way create an attorney-client relationship.