Will the effective date of the new credit card law change?

The ‘Credit Card Accountability, Responsibility and Disclosure Act’ was supposed to come into effect on 1st July 2010 though some of the rules have already been enforced. As a consequence of the proposed new rules, the credit card companies have intensified the predatory practices in order to maximize profit before all the new rules come into effect. As a result, Federal Reserve is trying to change the effective date of the credit card laws to 1st December 2009.

The new credit card rules

The new credit card rules are expected to curb predatory practices. After the laws come into effect, the credit card companies will not be able to increase the interest rates arbitrarily. The companies will also not be able to penalize customers due to a late payment in an unrelated bill, which is referred to as universal default. The companies will have to mail credit statements 45 days prior to the due payment date.

The new act has also imposed restrictions for unemployed teenagers. The credit card companies will not be able to issue credit cards to people below 21 years of age. Even if they issue, they will have to check the customers’ ability to pay off the balance or a guardian will have to co-sign the card.

Consequences of the new rules

As a result of these new rules, the credit card issuers have already started intensifying the predatory practices from the time the credit card laws have been enacted. A recent report states that the companies are even doubling the interest rates on customers who pay their bills on time. They have also increased the balance transfer rates significantly.

Reasons for delay in implementation

When the bill was signed into law on May 2009, the banks have claimed sufficient time so that they could rework their computer processing system so as to implement the changes correctly. They needed time to create new accounting and billing systems along with some other changes. However, according to the consumer advocates, the delay in implementation would help the credit card companies and banks to squeeze the customers as much as possible. This has become true as the credit card companies and banks have started various predatory practices in order to make profit as much as they can.

Proposal to end this practice

In order to curb the above mentioned practices, Ben Bernanke, the Federal Reserve Chairman, has proposed to advance the effective date to December even if it will be difficult for the companies to implement the changes in such a short time. However, it will benefit the customers as they will get protection sooner.

Though the lawmakers are not eager to advance the effective date, yet the pressure for action in the Presidential House as well as among other voters may result into the change in the effective date of the credit card laws to December 2009.