Countdown to Credit Card Reform

In an ideal world, one would not worry about the recession, high unemployment rates, the foreclosure epidemic and the never ending debt load carried by the average American. In what has been referred to as the “Year of the Consumer,” 2010 has a lot to offer in federally mandated “changes” in the credit card industry.

With only eight days until enactment of The Credit Card Accountability, Responsibility and Disclosure Act of 2009, commonly known as The Credit Card Act of 2009, several changes are occurring that will have an impact on how Americans utilize their credit cards, debit cards, and gift cards. Are you aware of your rights and protections under the new law?

Consumer protection

Interest rate increases will be banned except when a cardholder is more than 60 days delinquent in paying a credit card bill.

The credit card issuer must review a cardholder’s account six months after increasing an interest rate and return the annual percentage rate to the prior lower level if all payments have been made on time.

An interest rate cannot be increased within the first 12 months of account existence and promotional rates must have a minimum of six months duration.

Advance notice of 45 days must be provided to a cardholder prior to changes in credit card terms and conditions. This includes any reward or benefit structure of a credit card.

The practice commonly known as universal default and double-cycle billing are no longer allowed.

Statements must be mailed at least 21 days before the payment due date.

Payments must be credited as on-time if received by 5 p.m. on the due date. All due dates that occur on a weekend or holiday are extended until the next business day.

Over-limit fees are now prohibited unless a cardholder specifically opts to allow processing of a transaction rather than being denied at a point of sale.

Enhanced consumer disclosures

A clear disclosure on how long it would take to pay off a credit card balance if cardholder makes only the minimum payment each month must be provided.

A clear disclosure on the total cost of interest and principal payments if a cardholder makes only the minimum payment each month must be provided.

Late payment deadline or postmark due dates are required to be clearly shown and provided to cardholders.

Protection of young consumers

Credit cards can no longer be issued to individuals under 21 unless they have an adult co-signer or prove payment ability through a reasonable income.

All college students must obtain permission from the adult co-signer to increase a credit limit on joint accounts they hold with those individuals.

Individuals under the age of 21 will now be protected from pre-screened credit card offers unless they specifically opt-in for said offers.

Gift cards

Gift cards are now required to remain active for at least five years from the day of their initial activation.

Dormancy or inactivity fees may no longer be imposed on gift cards unless there has been no activity in a 12-month period.

Dormancy or inactivity fees must be clearly disclosed to gift card buyers upon purchase.

Should a gift card expire after 5 years, the terms of expiration must be clearly disclosed to gift card buyers upon purchase.

To learn more about The Credit Card Act of 2009 and your rights and protections under the new law, visit

William E. Lewis Jr. is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

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