To give consumers more rights against credit card issuers' practices of increasing rates and fees, President Obama signed into act the Credit Card Accountability, Responsibility and Disclosure Act of 2009 in May. This act is more commonly know as the Credit Card Act of 2009 and will be implement in three phases. The First Phase of this act went into effect on August 20th 2009 and the other two phases will come into effect next year.



As we all know and probably have experienced, credit card companies have been able to throw their weight around for a long time now, and have dictated their own terms and conditions, with consumers being unable to do much about it. This act takes the right step in giving consumers additional protections and in dealing with the credit card companies.

As of August 20th credit card companies must give any consumer a forty-five day notice of any changes to the rate or fee increases. This is an increase from the fifteen-day notice of prior law. The notice must explain the steps consumer can take to exercise his or her right to cancel, including a toll-free number to call, and the deadline for opting out.

The new law also mandates a 21-day period for payment on a credit card, before the credit card company can assess late charges. Previously, credit card companies only gave consumers fourteen days for payment after mailing out the bill. Under the new act, this payment period will increase to twenty one days to accommodate for postal delivery times. This is a much needed relief for many consumers who have ended up paying late fees or lost their lower rates for being late by only a few days, or sometimes even just one day.

Perhaps the new law will change that feeling of helplessness that just about all of us felt when the credit card company would raise your rate and all you could do was go along and just pay whatever was demanded. Now you have the options to opt out of a rate increase. If the credit card company increases the rate on your card, you can ask them to freeze the rate at the current rate. However, by doing so you cannot use the card for future charges and you must pay off the current balance on the card in five years. While not perfect, this is certainly better as now you have an option of refusing discretionary rate increases. There is an exception to the opt out rule however: you cannot opt out of increases to the minimum payment amounts. You can only opt out of increases to interest rates.

What to Expect from the Second and Third Phases of the New Act in 2010

The second phase will come into effect on February 22, 2010 and will give consumers more protection when it comes to rates, fees and terms. Also, in an effort to develop credit responsibility among young adults, it will become tougher for people under 21 to acquire cards and, if they do acquire them, the restrictions will be higher. But the biggest impact in the second phase will be on rate increases. The act requires that rate increases apply to new purchases only and cannot be retroactively applied to your existing balance. But if you are more than 60 days due on your payment then the credit card company can apply the rate increase retroactively on the balance. You can regain the original interest rate if you make your minimum payments on time for six months. The last phase of the act will come into effect in August of 2010 and will regulate gift cards.

Remember, if you feel Credit Card Company or a debt collector is going about the collection of your debt in the wrong way, the author of this article is an expert in such matters and can help you.