Government legislators are up in arms over what to do with the economic downturn that is recently plaguing the United States. Their latest bid to stem the tide is the much hyped credit card bill scheduled for release Tuesday.
The government is still reeling from the financial crash that happened late last year. The effect of the crash still continues up to this day. RealtyTrac Inc. recently reported that the foreclosure problem has worsened. This April, a jump of 32% of American homeowners facing foreclosure was seen compared to last year's figures also taken in April. The rate of jobless Americans also race to 8.9% this April and predictions put the numbers even higher in the coming months.
Clearly the American public needs some breathing space and legislators are hoping to provide just that with the credit card bill. However, even if the bill were to be signed immediately, the earliest that they can expect to receive its benefits would be after nine months.
Once President Barack Obama puts his signature on the bill, the credit card industry will have nine months to update its business practices to reflect the legislations of the bill. The credit card bill will largely do away with arbitrary interest rate increases and high transaction fees that have been the bane of credit cardholders.
The credit card bill will have other provisions as well, which encourage transparency and fair practice in the credit industry. One provision requires credit card companies to make their credit card agreements available online. Credit cardholders will also be allowed to pay their bills through the phone or through the Internet for free. Interest rate increases would also be applicable only after the credit card company has given the cardholder a 45-day notice and an explanation for the rate increase.
A key provision of the credit card bill addresses what is being called in the industry as “universal default”. Universal default is when a credit cardholder's interest rates are changed by a lender when the credit cardholder misses a payment to another lender on an unrelated debt.
The credit card bill will give a cardholder a leeway of 60 days to catch up with the debt payments before seeing an interest rate increase. If the cardholder consistently pays the required monthly amount for six months, the credit card company must return the interest rate of the cardholder to the previous rate.
The credit industry is against the bill, naturally, and they are warning legislators that the bill could restrict access to credit for some Americans. However, lawmakers are dead set on the bill, stating that this time around, the credit industry has just gone too far.