New legislation that took effect Monday, February 22 takes more than a few swipes at the credit card industry, homing in on controversial practices ranging from sneaky interest rate hikes to college campus card-hawkers.
The new protections are part of a package included in the federal Credit Card Accountability, Responsibility, and Disclosure Act (CARD), authored by Congressmember Carolyn Maloney and signed into law by President Barack Obama in May 2009.
The initial regulations, which were activated in August, stipulate that credit card issuers must provide written notice to consumers 45 days prior to increasing rates or making any other significant account changes; inform credit card holders of their right to cancel their card before a rate hike takes effect; and send notifications to consumers 21 days before the due date of any payment.
The second phase of the legislation “will level the playing field for consumers,” Maloney said in a statement celebrating the new reforms. The regulations limit interest rate hikes in the first year and curb retroactive rate increases.
Additionally, they implement restrictions on over-the-limit fees, ban double-cycle billing, and facilitate actions like making payments. In fact, one of the newly enacted laws – authored by Congressmember Gary Ackerman – prohibits credit card companies from charging customers a fee to pay bills over the phone or online.
Also noteworthy under the recently effective reforms are safeguards for young consumers, ranging from credit restrictions on people below 21 years of age to a ban on the marketing of credit cards within 1,000 feet of a college campus. Marketers are also no longer permitted to supply credit card applicants with free gifts in exchange for signing up and cannot send pre-approved cards to under-21s.
Maloney said the legislation ushers in a “new era of fairness and transparency in the market,” words echoed by Mindy Bockstein, chair and executive director of the New York State Consumer Protection Board (CPB).
In a statement, Bockstein encouraged consumers to visit CPB online at www.nysconsumer.gov for detailed information on the new credit protections. The final phase of the protections takes effect in August.
