Banks Forced To Make Changes, Consumers Benefit
Bank of America has launched a new program that will offer to their credit card customers an easy to understand list of terms and conditions for each customers account. This is in response to the credit CARD Act enacted in May 2009 and will be in full effect starting February 2010.
The credit CARD Act requires a 45 day notice before key contract changes can take effect. These contract changes include interest rates, fees and finance charge increases. The provision does not include credit limit changes and interest rate caps… so if a consumers credit limit is decreased by the card company (without notice) the consumer will be responsible for any penalty’s.
The credit CARD Act also requires that all credit card companies send statements to customers 21 days before a payment is due.
Bank of America says the Credit Card Clarity Commitment Program is an extension of Bank of America’s clarity initiative launched earlier this year for their mortgage business. This is a trend that will likely continue as more banks make the same kinds of changes. These changes are the result of consumer’s demand for a better credit industry.
Consumers are frustrated with the lack of government oversight and the sub-prime lending crisis that has lead to the current financial downturn. Consumers want more transparency and better business fairness from these companies. This is a reasonable request from consumers who have, for years, endured rate hikes and fee changes that would occur at any time the credit card company chose, including the rate hikes that occurred in 2009 until Senator Chris Dodd introduced a bill that would freeze rate hikes until the CARD Act took effect.
This is a brief list fo the changes that will take effect in February 2010 under the provisions of the credit CARD Act:
- 45 day notice before key contract changes.
- Statements issued 21 days before payment is due.
- No rate hikes on existing balances unless over due by more than 60 days.
- No rate hikes because of unrelated over due accounts.
- No rate hike during first year of issuance.
- Promotional rates remain in effect for no less than 6 months.
When a 45 day notification of changes has been issued, the provision does not prevent the issuer from raising rates on new balances at any time for any reason.
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