In 2009, Congress passed the Credit Card Accountability Responsibility Act. Do you know what changes this act made to protect you and your finances?
President Barack Obama signed the Credit Card Accountability Responsibility Act in 2009. The expressed goal of this act was to promote fair and transparent credit card company lending practices. However this bill also obligates customer responsibility, namely to know what your rights are. Here are five things you should know about the Credit Card Accountability Responsibility Act of 2009:
This protection is in three parts. Firstly, lenders must give you at least forty-five days advanced notice before any interest rate increase. Moreover, you have the right to cancel your card and pay off the remaining balance at your current interest rate if a higher interest rate is imposed. Lastly, credit card companies are not allowed to apply interest rate increases to pre-existing balances for any reason other than negative credit behavior on the part of the customer.
Cardholders who pay on time cannot be penalized with rate increases
This requires lenders to review your payment history every six months and decide if a rate decrease is necessary. If you make six month’s worth of timely payments after an interest rate increase, the credit card company must lower your interest rate back to the amount it was before the six months of on-time payments.
Cardholders are protected against unfair due date practices
For example, statements must be sent out twenty-one days before the due date and the due date must fall on the same day of each month. Additionally, if the due date happens to land on a weekend or holiday, the due date is to be put off until the next business day.
Cardholders can set their own credit limits
This means that creditors can no longer extend cardholder credit over a limit set by the cardholder and therefore cannot charge over-the-limit fees.
Cardholder payments should be fairly allocated
Many card companies were in the practice of using payments to pay off the lower interest rate charges first. This means that if you took out a cash withdrawal, which accrues the highest interest-rate charge of any other credit card use, the lender would actually use your payment toward things like purchases, leaving your higher interest cash withdrawal balance in place. The new bill banned this practice.
As you can see, the Credit Card Accountability Responsibility Act has gone a long way in protecting you, the cardholder. It is important that you understand just how the bill provides for you so that you can defend your rights, if need be. The next time you see that your credit card company is going to arbitrarily raise your interest rate, you’ll know exactly what to do about it. Just remember that there is no substitute for vigilance and that your credit is your responsibility, whether youre working with credit cards or other forms of personal loans. Keep your eyes open and your mind on the fine print.
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