Early Credit CARD Act Legislations Already Full Of Loopholes
Come February of 2010, the Credit CARD (Card Accountability, Responsibility and Disclosure) Act of 2009 will finally be activated. There are even talks in Congress of making the activation date earlier, though whether it will actually happen remains to be seen.
While the bulk of the Credit CARD Act is scheduled for activation on 2010, February, some parts of the bill were already put into action last August 20. Considered as the first phase of the activation of the Credit CARD Act, these early activated legislations introduce some industry changing rules to the credit card industry.
Under the new rules, credit card companies are required to give 45 days of notice to credit card holders if they want to introduce any considerably changes in their credit card agreements. In the notice, the credit card company must also inform the credit card holder of their right to say no to these changes which will automatically mean that they are canceling their credit card line. The information should also include a toll-free number for the card holders to call and should also indicate a deadline date for credit card holders who want to opt out. If a card holder chooses to opt out of the changes, they are allowed to pay off their remaining balances using their older, lower interest rate.
The new rules also give credit card holders 21 days between the time they receive their bill to the time they have to pay it off. With 21 days leeway, credit card holders should be able to catch up on their credit card bills.
As good as these new legislations are credit card companies are already finding loopholes to squeeze out of them. For one thing, while the opting out of credit card agreement changes may seem very advantageous for credit card holders, it has very serious limitations. Credit card holders do not have the option to opt out of credit limit cuts or increases in monthly minimum payments. The option to opt out of an interest rate increase is also limited only to credit card holders who have fixed rate interests. Credit card holders who have variable interest rates are not illegible for opting out. Because of this particular loophole, credit card companies moved fixed rate interest card holders to variable rates.
Another particularly confusing loophole allows credit card companies to apply the higher APR rate if the credit card holder makes any purchases 14 days after he or she received the notice for the change in the APR. A credit card holder who receives the notice cannot, therefore make purchases to maximize the use of the lower APR rates during days 15 to 45. The problem is also much more serious because credit card companies are not required to inform credit card holders regarding this particular loophole.
