On Monday the major reforms of the Credit Card Accountability, Responsibility and Disclosure Act went into effect. It includes new provisions that:
• prohibit arbitrary interest rate increases and universal default on existing balances
• prohibit issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees
• require payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest
• prohibit issuers from setting early morning deadlines for credit card payments;
• prohibit interest charges on debt paid on time.
“For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs,” said President Obama.
The bill was cosponsored by U.S. Rep. Russ Carnahan (MO-3) and signed into law on May 22, 2009.
Carnahan said, “When so many American families are struggling to make ends meet, consumers who play by the rules deserve to be treated fairly by the credit card companies.”