The economic downward spiral of 2009 is one of the worst financial crisis after the great depression of the early 1930s. Financial analysts observed that many Americans had mounting credit card debts, and something had to be done at the federal government level to deal with this situation. One of the ways that the government decided to deal with credit card debt is by introducing the Credit Card Accountability and Disclosure Act of 2009. This bill is widely known as the Credit Card Relief Act, and apparently, it included provisions that amended the way credit card companies do business.
This act has been mistaken to be a government initiative to pay off individual credit card debts. Several website advertisements, which propagate the idea of government funds to pay off credit card debts, are frauds. The Credit Relief Act, at the most, can help you deal with your mounting debts, as it put curbs on the interest rate that credit card companies charge. The act also aims at protecting the interests of vulnerable consumers.
Credit Card Act Provisions
- As mentioned, the government credit card relief act is aimed at changing the way credit card companies do business.
- It calls for greater transparency in the credit norms and also forbids card companies from arbitrarily changing the terms of contract.
- The act is one of the steps taken by the Obama administration to help the population deal with their financial situation.
◆ The act requires the card companies to give at least 45 days notice if they want to make any changes to the existing interest rate.
◆ The act is also referred to as bill of rights, as it gives rights to the consumer to cancel their card if the companies hike the rate of interest. Consumers have up to 3 billing cycles to say no to any new terms regarding the interest rate.
◆ Under the Credit Card Debt Relief Act, companies are required to have their credit card contracts online for government scrutiny. It also mandates companies to submit credit card agreements to the federal reserve board at the end of each quarter.
◆ This government credit card debt relief initiatory also stipulates the size of the font that has to be used by companies for the contract. Companies have to mail the credit statements to the consumers 21 calendar days in advance before the due date, which is 7 more days than the earlier time frame of 14 days.
◆ Another important provision calls for companies to have the due date on the same day each month. If the due date falls on a weekend or government holiday it should be re-scheduled for the next business day.
◆ Companies have been prohibited from using 'double cycle billing' in which they use previous month's balance to calculate the current month's bill. The new act puts a ceiling on the number of 'over the limit' fees companies can charge.
◆ Credit cards can't be issued to people who are under the age of 21 unless they have a co-signer.
◆ Card companies cannot set an expiry date which is less than 5 years. Credit card companies cannot charge service fees on non-operational cards unless they haven't been used for more than 12 months.
The new provisions under the act have helped many Americans to better manage their debts. This federal government credit card debt relief initiative will ensure fair practice and greater transparency in credit card dealings.