In the recent past the US has seen a surge in credit card debt and has increased 25% since the last decade. At present, nearly three quarters of all US homes have a credit card with nearly half of those carrying a credit card balance. By the end of 2008 the penalty interest paid by customers had hit nearly 15 billion dollars.

Credit Card Bill Of Rights – Protecting Consumer Credit Card Debt

The Credit Card Accountability, Responsibility And Disclosure Act or simply, the Credit CARD Act of 2009 introduced by President Barack Obama might just be a corner stone in the US financial industry. This new credit card legislation ushers in a new era of consumer credit card debt protection and acts as a credit card bill of rights for consumers. Under the new act the following will need to be observed by credit card companies:

• Retroactive rate increases: The new credit card act prohibits lenders from increasing rates at their wish. Only if the credit card debt has been unpaid for over 60 days can the rate be increased.
• Agreements posted online: According to the new credit card legislation the credit card issuers will need to post consumer credit card debt contracts online to allow more transparency.
• Shifting of payment dates: The credit card bill of rights prohibits the shifting of repayment dates by the credit card companies. If a certain date has been set out in the contract, it needs to be followed.
• Mailing of statements: Credit card companies are now required to mail out the credit card debt statements to consumers 21 days prior to the payment being due.
• Clearer and more transparent disclosure: The credit card bill of rights is aimed at doing away with hidden fees and charges and is targeted at bringing in complete client disclosure. This will enable consumers to make a more informed decision about credit card debt.
• Marketing to teenagers and college students: Under the new credit card legislation, credit card companies are being dissuaded from advertising their services to teenagers or college students.

Credit CARD Act 2009 – Effect on Consumer Credit Card Debt

The question on everyone’s mind at the moment is “How is it going to affect me?” The new credit CARD act will affect consumers in the following way:

• Lesser availability of credit: With the new credit card act in place, consumer credit policy across the board will be tightened thereby reducing the approval rate for new credit cards.
• Price of credit: The new credit card legislation has not placed a cap of fees and charges charged by credit card companies. This in the long run would mean that credit card companies may charge higher interest rates and fees on new credit card debt.
• Rating system to be used: Just as any other credit instrument, credit card companies will need to use a 5 star rating for consumer credit applicants and will have to disclose this rating on the approval and credit instrument.
• Higher repayments: With the increased interest rates charged by the credit card companies, it may lead to increased repayments, thereby affecting your net cash flow.

Credit CARD Legislation 2009 – Effects On My Credit Report?

While the new credit card legislation is an attempt on the part of the government to protect consumers, the credit card act is also an attempt to ensure that consumers live within their budget and not beyond it. Credit cards are meant to be used as a lifeline and not be solely dependent upon. Hence in the long run with the new credit card debt reforms, this will lead to lower overall debt on your credit report. In addition the regulation to not shift repayments dates will mean that clients will have better repayment history and eventually a better and improved FICO credit report.