Credit Card Reforms Take Effect

The first portion of the new rules regarding credit cards went into effect Aug. 20.

The Federal Reserve Board put into place a rule concerning how much time a credit card must give you before changing rules on your card. Creditors must give a card user 45 days notice before changing the terms of the cardholder’s agreement, such as raising the interest rate. The rule also requires the creditor to let the cardholder know they can cancel their card before the rate increase takes effect.

An additional rule taking effect requires the card companies to send a statement 21 days before the due date, thereby giving consumers more time to pay their bill.

“This is the beginning of the end of unfair, deceptive, and anti-competitive practices by credit card issuers,” said Rep. Carolyn Maloney, D-New York. “Increased notice of rate hikes will allow the credit markets to function more efficiently and allow consumers to shop around for a better rate and cancel the old card. Increased notice of payments due will give consumers time to better manage their credit.”

The rules were part of the credit card reform bill that passed into law in May. Before passing Congress, the rule had previously been part of a set of rules that the Fed planned to institute next summer.

The rule was set to go into effect Aug. 20. Other portions of the law are set to take effect on Feb. 22 and Aug. 22 of next year.