President Obama's Credit Card Law to Protect Cardholders

Both cardholders and credit card issuers are to blame for credit card debt problems. Many cardholders overspend and are careless about sending in timely payments. Many credit card companies have been sneaky and unreasonable about increasing rates and charging fees and penalties, making it even more difficult for their customers to get out of debt.

At a signing ceremony in the White House Rose Garden, President Obama signed into law a bill that will help protect credit card holders from the card companies' bad behavior. (Unfortunately, Obama is unable to protect cardholders from themselves. They'll just have to grow up and become responsible adults).

President Obama spoke out against unexplained fees, changed payment deadlines, increases in interest rates, and applying payments toward low rate balances rather than high rate balances. Card holders with excellent track records as well as those who are delinquent have all been victimized by the companies' greedy tactics.

“We’re here to put a change to all that,” President Obama declared. He set some new rules for the card companies which will become effective in early 2010:

• People under 21 cannot receive credit unless they can prove they have the ability to repay the debt or if a parent or guardian co-signs.
  
• Rates on existing balances cannot increase until the cardholder is at least 60 days delinquent.
  
• Once a delinquent cardholder has paid at least the minimum for 6 months, their card's rate must return to it's original percentage.


• All cardholders must receive 45 days' notice and an explanation before any rate increase.


• Increased rates are not retroactive on previous balances for people who pay their bills on time and have been sending in at least their minimums.
  

Warning - the credit card companies will find other ways to improve their revenue. In danger of extinction are cards with no annual fees and cards with freebies and cash back. Basic interest rates and fees might go up for everyone. The top issuing companies will probably survive this change but smaller banks might decide to get out of the business, giving the surviving companies less competition and a bit too much power for my taste.

For now, I will continue to pay my one and only card in full every month and brace myself for what comes next.

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