The Credit Cardholders' Bill of Rights and YOU

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 is now law and it puts forth some very valuable protection for credit card holders. While no person or business forces another person or business to apply for and open a credit card account, credit card companies have been taking advantage of the fine print in their contracts and charging cardholders outrageous fees and making "anytime, any reason" interest rate increases for far too long.

While I am a staunch free market capitalist and I believe that both people and businesses should accept the consequences of their decisions, whether good or bad, the introduction of the Universal Default Clause, among other tactics, has opened the door to a $15 Billion goldmine of fee income that most cardholders aren't even aware of. I think you'll agree that the following list of guidelines in the new Credit Card Act is both JUST and long overdue.

1) Credit card issuers must notify cardholders in writing at least 45 days prior to any change in the annual percentage rate (APR). If the cardholder elects to cancel the account before the effective date of the increase, the cancellation cannot be considered a default on the account and cannot trigger an obligation to immediately repay the account in full.
2) Credit card issuers are prohibited from increasing APRs that apply to existing balances unless specific conditions apply. An APR may be increased only if a) the index on which the rate is based changes, b) it is a promotional rate that has expired, c) a cardholder fails to comply with a hardship workout plan, or d) the account falls 60 days past due.
3) If a rate increase is triggered by a cardholder falling 60 days past due on the account, the cardholders' APR will be restored to what it was before the increase once the cardholder has made timely minimum payments for six consecutive months.
4) If different APRs apply to separate portions of an outstanding balance, the amount of any payment beyond the minimum payment due must be applied to the portion of the balance with the highest APR.
5) Credit card issuers can no longer increase a cardholders' interest rate on an existing balance on credit card "A" due to negative activity on credit card "B", as is currently the case.
6) Credit card issuers are prohibited from imposing interest charges on any portion of a balance that is paid by the due date.
7) Credit card issuers are required to mail credit card statements at least 21 days before the bill is due (current requirement is 14 days).
8) Cardholders must be given the option of having a fixed credit limit that cannot be exceeded and credit card issuers cannot charge over-the-limit fees on cardholders with fixed limits. This makes the ability to exceed an established credit card limit and opt-in election.
9) Credit card issuers are prohibited from charging interest on credit card transaction fees, such as late fees and over-the-limit fees.
10) If the payment due date is a date when a credit card issuer does not receive or accept payments by mail (e.g., weekends and holidays), the creditor cannot treat a payment received on the next business date as a late payment.
11) Credit card issuers are prohibited from charging a fee to allow a cardholder to pay a credit card debt, whether the payment is made by mail, telephone, electronic transfer, or otherwise.
12) Credit card issuers are required, when soliciting persons under the age of 21, to obtain an application that contains either a) the signature of a parent, guardian, or other qualified individual willing to take financial responsibility for the debt, b) information indicating an independent means of repaying any credit extended, or c) proof that the applicant has completed a certified financial literacy or financial education course.

There is more to the bill than listed here but I have chosen to cover the more beneficial elements. To read the full text of the bill click here. The only unfortunate thing about the bill is that it doesn't take effect for 9 months after its passage on May 27, 2009.