Many people have already experienced problems that come from some credit card companies. There have been enough of them that Congress has now enacted new laws for companies that have clearly become out of control with greed. The credit card laws, which came into effect February 22, 2010, are apt to make many consumers much happier because the consumer has several gains with this move. Here are four positive benefits of this new package.
Credit Card Fees Are now Limited
One of the main complaints have been the sudden rise in credit card interest rates, and sometimes this was for no apparent reason. In fact, once the credit card companies learned of the planned move for new laws by Congress, many credit card holders found their rates raised.
The new law places limits on all fees, which cannot exceed 25% of the credit limit, but this is only in the first year of possessing the card. The company now has to limit all fees, including those for activation and any annual fees.
The limit also applies to fees that are charged for going over the credit limit. While new credit card holders will have to opt-in to approve the feature, a credit cards fee will apply if permission is given for overcharging. Fortunately the new law also provides that fees are limited to only one per billing cycle.
No Limits on Credit Card Interest Rates
Competition has largely kept credit card companies from raising their interest rates too high when offering new credit cards. Although many people have seen recent raises on credit cards already held, there will not be such surprises now that the law has already gone into effect.
The new law prevents any interest hikes within the first year of ownership on the card. Unfortunately, Congress did not place a limit on the ceiling rate that can be put on the plastic.
Instant Credit Card Approval Put on Hold for Teens
It used to be that a student credit card was very popular and could be obtained from credit card company representatives floating around college campuses. This should be a thing of the past because of the new law. Representatives are now not allowed within 1,000 feet of the campuses, which should make a lot of parents of college-age kids much happier.
Now, all applicants under the age of 21 have to go through an approval process. They cannot be issued a new card without having either proof of income to pay for it, or they will need mom or pop to co-sign.
Improved Transparency on New Credit Card Bills
Another pleasant surprise is that there has to be a new level of transparency on the bill that credit card holders receive each month. The company will now have to reveal just how long it will take to pay off the bill in full if only the minimum amount is paid each month. This will provide many owners of credit cards with some reality-based information that will certainly prove to be a shocker to some.
There are also a number of other new features of the law that will certainly be helpful to those who are fearful of what might happen, or have already experienced problems. While these new laws are now in place, consumers still should not rush out to choose a new credit card, or trade in one that has rather good interest rates. Some loopholes still exist, and sooner or later, new laws will have to be enacted.