Credit CARD Act--Rate Change Notice |
By Jonathan Boral on March 16, 2010
.jpg.aspx) One of the most striking aspects of the Credit Card, Accountability, Responsibility, and Disclosure (CARD) Act is the changes to a bank’s abilities to change interest rates on credit cards. This Act, set to take effect in February 2010, gives lenders less opportunities to change rates vicariously without your knowledge.
Before the passing of the Act, banks had almost unlimited power in changing interest rates. These rate changes could occur instantly, and without warning. Many times, banks raise interest rates because of late credit card payments, but do not have to acknowledge this increase; they can merely wait till you have discovered it yourself. Also, most banks raise rates when there is any change within your credit report, even if that change does not occur in the account at the specific bank which has now increased your rate, thereby increasing the rate on several credit cards without notice.
The biggest effect of the Act is now banks must notify you 45 days prior to any change to your account. This means that you will be aware of what you should pay off as quickly as possible before the change goes into effect. Also, the rate increase can only take effect to new charges to your account; any existing charges, unless they have not been paid within 60 days, are subject to the old interest rate.
Not only does the 45 day marker apply to interest rate changes, but also rewards programs and other terms as well. Before the act, banks were given the option to end these programs without your knowledge; now they must confirm and allow you to adapt a new financial strategy within that 45 day period.
Once again, the Act is a step towards making Americans more knowledgeable about the many different aspects of owning a credit card. It is also protecting them from any banks who are more interested in making money off of their clients rather than helping making them become more financially stable. Lastly, it is important to note the necessity of staying knowledgeable about the terms within your credit card agreement.
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