A Closer Look At The New Credit Card Law

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There seems to be plenty of checks and balances in the new Credit Card Accountability and Disclosure Act that comes into force with effect from Feb. 22, 2010. Banks and cardholders will see a change in the rules the game is played. The law prohibits interest rates from being raised during the first year of opening a credit card account. One good news for card holders is the ban on interest rate hikes on existing balances. Moreover, it will be mandatory for promotional rates to be valid for at least six months from the offer.

Banks that have been using unfair practices will need to tow the line with this new law. With a nine month preparatory period given to the banking industry by the Congress, banks have been going all out to boost income and tighten a grip on their current customers. According to banking sources, there could be a negative impact on the availability of credit and as the interest rates on credit cards were likely to rise. This may be the case in these few months leading up to the law being passed. Hiked interest rates, hidden fees, lower credit have all been commonplace in the past few months. Customers that have been paying on time have also been penalized to a large extent.

What has been seen is an additional monthly fee of up to $10 on accounts with little activity. Some banks have used annual fees as a weapon and have levied an annual fee on cardholders that do not charge more than a specific amount to their credit card. Banks look at this as a change in business practices but consumers think otherwise. It is alleged that most credit card companies have hurried to change the terms and conditions before the law comes into effect with the banks shows little inclination to change their policies until the last moment.

Every consumer needs to tread with caution as many credit card companies have already started seeking loopholes where they can drive up credit card costs. It is pretty evident that banks are looking for ways to increase their revenue before the law comes into practice. This could definitely have a negative impact on consumers. What is expected is higher annual fees, fine print that states a change in rate without notice, lower credit limits, and wider use of annual fees for inactive or less active accounts. The bottom line is to read the fine print, understand the terms and conditions, and scrutinize your credit card statement well.

As a consumer, you have to right to choose. You don't require holding on to credit cards that don't serve any purpose. Shopping around for new cards would be the appropriate thing to do. The credit card industry is competitive. Finding the right card may take a lot of effort. However, with the implementation of a new law it will be well worth the effort. There will always be new credit card abuses that will proliferate, but the new law should be a stepping stone to better credit card management.