A major overhaul is underway to change the way credit cards work and are marketed in the United States. Congress has passed The Credit Card Reform Act and is awaiting President Obama’s approval, which might happen later today. The Act’s goal: to stop or prevent unfair or deceptive lending practices by banks and credit card issuers.
The Bill contains some downsides for consumers, but it has more than a dozen great benefits for consumers. As proposed, the Bill would:
- ban retroactive interest rate increases (unless you’re 60 days or more late paying your credit card)
- require 45-days notice before a rate hike
- restrict default rates to 6 months if customers pay on time
- outlaw universal default
- mandate that payments be first applied to the highest rate balances
- require anyone under 21 to have a co-signer to get a credit card
- forbid credit cards from being issued to people under 18
- set rules for how quickly banks must apply payments
- give consumers a minimum amount of time to pay bills
- prohibit fees on payments made via phone and the Internet
- put a 5-year lifespan on gift cards and eliminate their hidden fees
- require better disclosure of payment due dates and late payment penalties
- prevent issuers from establishing early morning payment deadline
All of these provisions boil down to one thing: bringing more fairness into credit card lending and marketing practices.