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The New Credit Card Law: What You Need to Know

Today, the long-awaited new credit card law comes into effect. AP Personal Finance writers Candice Choi and Eileen Connelly tell us how the new regulations shaft protect consumers:

INTEREST RATES

THEN: Banks could raise the interest rate on an account at any time, including the rate on an existing balances, even if you weren't late on payments.

NOW: The rate cannot be raised in the first year after an account is opened unless an introductory rate has come to an end. After that, cardholders must be notified 45 days in advance of any rate change.

For existing balances, rates can't be raised unless the account is at least 60 days past due. If payments are made on time for six consecutive months, the original rate must be restored.

There's still no cap on rates. [...]

SERVICE FEES

THEN: Banks could charge as much as they wanted. They could assess annual fees, activation fees and other fees. This was mostly a problem for subprime cards marketed to those with poor credit scores. One popular card, for example, the Premier Bankcard, charged $256 in first-year fees for a $250 credit line.

NOW: Service fees, such as activation and annual fees, will be capped at 25 percent of the credit limit during the first year of use. After that, there is no cap.

http://www.latimes.com/business/nationworld/wire/sns-ap-us-credit-cards-then--now,0,5775569.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%2BMostEmailed%2B%28L.A.%2BTimes%2B-%2BMost%2BE-mailed%2BStories%29


I had not heard the bit about requiring a cosigner if you are under 21, and have not yet forgotten the constant wave of credit cards offered to me while in college. However, college students (and let's not forget those between the age of 18 and 21 who are not in college such as our armed service members) are adults in all legal matters with the exception of drinking alcohol in the US. Are 21 year old unemployed college grads more credit worthy than employed 18 year olds?

There are some good protections for those who for whatever reason find themselves dependent on their credit card. Hopefully companies will not be able to sidestep the intent of the regulation by making the fine print and user agreements more elaborate and hard to understand.
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After rereading the article, I did find that 18-21 year olds can get credit cards if they can prove an independent ability to repay them. Shouldn't EVERYONE have to meet that requirement?
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The law may have gone into effect today, but the card companies had plenty of notice. Citibank jacked up their interest rate to 29.99% as soon as the law was passed. Good thing I don't keep a balance!
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Skipweasel - Interesting point. However, I am not sure I follow why a line of credit should be extended to anyone (including non-working spouses) if they have not proven an ability to repay the debt. Perhaps I am missing the point, but asking their working counterpart to cosign the account or to add them to an existing account would solve the issue quite simply. Part of the intent of the legislation is to keep credit card companies from preying on those without an ability to repay.

Stephbot / graymccarty - Yes, this one particular article is US-centric. However, it would be cool to hear from some of your about how your system is different/better/worse. I don't think the occasional article specific to one geography can't get some interesting conversations going...
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