Consumer Payment Card News

Card T&C

The U.S. Senate overwhelmingly voted to change the rules under which the U.S. credit card industry plays by. The new terms and conditions that will likely be imposed on the credit card business will handcuff issuers forcing them to limit credit lines and lower approval rates based on risk, and will surely resurrect annual fees and other maintenance fees that disappeared in the early 1990s. But, the new restrictions will bring much needed relief to cardholders struggling with debt in the “Great Recession” and those who have been tortured with interest rates of 30% or more plus the nuisance of late fees and over-limit fees. Under H.R. 627 practices such as “universal default,” fees for delayed posting of payments, early-morning deadlines for credit-card payments are banned. Card issuers will be prohibited from charging over-limit fees unless the cardholder agrees to permit
over-limit transactions. Interest rates cannot be raised in the first year and promotional rates must last at least six billing cycles. Card issuers will also be required to apply payments over the minimum to the portion of the balance that carries the higher interest rate. The legislation also requires consumers under 21 to have a co-signer. Additionally, statements must be mailed 21 days before the bill is due and a 45 day notice is required for any fee, rate, or penalty increases. President Obama has indicated he wants to sign the “Credit Cardholders’ Bill of Rights Act of 2009” by Memorial Day.

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