Rep. Frank Pushes For Earlier Credit CARD Act Activation

Massachusetts Representative Barney Frank is currently pushing for an earlier activation date for the controversial Credit CARD (Card Accountability, Responsibility and Disclosure) Act. Originally, the Credit CARD Act was supposed to go live on February of 2010. The U.S. Representative is pushing for activation on December 1 of this year instead.

The Credit CARD Act was drafted by Congress early this year and was fast tracked through it, becoming one of the fastest legislations to go through Congress in recent years. President Barack Obama signed it into law on May and the Credit CARD Act was scheduled for full activation next year, on February. Parts of the bill were scheduled to go live earlier and, in fact, some legislations included in the Credit CARD Act were already implemented last month, in August.

While the Credit CARD Act was unpopular among credit card companies even while it was still being drafted, the delayed activation period has also proven to be very unpopular among credit card holders.

The delayed activation for the act was designed to allow credit card companies some time to adapt to the new credit card legislations. However, what it meant for credit card holders was raised interests and fees, credit being cut down, introduction of new fees and others. As a result, a growing outcry from credit card holders was heard which finally reached Congress through Rep. Frank.

Steven Adamske, an aide of Representative Barney Frank said, “We are not happy about what we are hearing on what banks and credit card companies are doing in advance of the effective date”. He said that, because of this, Representative Frank may soon file a bill recommending the full activation of the Credit CARD Act as early as December 1 of 2009.

The activation of the Credit CARD Act will see restrictions on the ability of credit card companies to raise existing interest rates, charge fees and issue exorbitant penalties on credit card holders. Since these practices are sources for a lot of the profits that credit card companies see, it is predicted that the Credit CARD Act will greatly cut down on the profits of credit card companies. Thus, an earlier activation of the Credit CARD Act would be seen as highly detrimental by them.

In a statement, American Bankers Association card policy senior vice president Ken Clayton had this to say, “We share concerns raised by the Federal Reserve and industry observers that moving too quickly in this area could dramatically reduce the availability of credit to consumers and small businesses at a time when the economy can least afford it”.