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Credit Card Industry Ushers In New Times

Fresh set of rules with the objective of treating some very bad credit issuing abuses come into effect between now and the month of February. Having said this, banks would certainly chase newer ways to bring down cardholders for cash.

Consumers are all set to receive a welcome bounty through credit card reforms as banks will be liable to inform 45 days in advance about any alterations made in their credit card offerings. This is only a commencement of a well chalked out plan. The entire layout will be inclined towards equaling the status of consumers and card issuing companies. It is a relief for customers who have often found themselves at the receiving end of lending malpractices.

Sally Greenberg, executive director of the National Consumers League, suggested the reform to be bearing the greatest importance among all the card reforms last decade. Also, he believes that the reform would tighten screws on abusers of lending practices.

Only A Few Though

For instance, the law remains rather mute on binding arbitration clauses that govern a major part of credit card contracts. Such contracts rob a cardholder the right to court via class action lawsuits and jury trials. Having said this, there are still various parameters through which a normal cardholder is shielded from the heinous practices of issuing companies. Some of them are:
•    Disallowing card issuers from enhancing rate of interest during the first year of opening an account; this, of course, unless the cards command a variable rate of interest or there is a payment default within first 60 days of due date.
•    Disallowing issuers from enhancing interest rates on presently running balances.
•    Asking issuers to bring down interest rates to earlier levels when cardholders make perfect payment for a span of 6 months after a default.
•    Disallowing fee on making payments

Cardholders have been constantly complaining about regularly altered deadlines that create a lot of confusion and subsequent failure in timely payments. At such times, it hurts when a late fee is levied. The new law would require issuers to keep a constant due date each month and also allow payment to be made till 5 pm. For ensuring that a person below 21 is not caught in a vicious debt cycle, the law has made mandatory for an adult to co-sign for an under 21.

Also, fresh plastic offerings can’t be made to under-21 group unless they have deliberately asked for it. Credit card issuers will be required to post their entire contracts via internet so that a consumer can choose among many other equals.

It goes without saying that the banking industry fought tooth and nail against the reform.