Question

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (Credit Card Act) made major changes in the way and amount of information that is provided to cardholders. Research and discuss this legislation. What type of information is included in the new law? Does the new law enhance your understanding of the impact of interest rates on financial decisions?

Answer 1

Answer : yes, the new law of credit card act 2009 impacts on financial decisions of an credit card holders positively. the act has got the following special features and protects the consumers:

1) Credit Card Issuers Must Alert You to Rate Increases : Credit card issuers must notify you of a rate increase — or any other significant change in terms to your credit card account — at least 45 days in advance.

2) Retroactive Rate Increases Are Prohibited : Issuers cannot increase the annual percentage rate, fee or finance charge on your existing credit card balance.

3) Interest Rate Reductions : interest rate changes based on every year credit score of an credit card holder.

4)Double Cycle Billing and Other Fees Are Prohibited : Two cycle, or double cycle, billing (the practice of calculating interest charges on both the current balance and the previous month’s balance) is banned.

5) Subprime or “Fee Harvester” Credit Cards :Fees on a credit card (not including late fees, over-the-limit fees, or returned check fees) cannot exceed 25% of the credit limit when the account is opened.

6) Credit Card Issuance : Credit card issuers cannot extend or increase a credit limit without considering the borrower’s ability to repay the debt.

How the Credit CARD Act Protects Young Consumers

No credit card may be issued to a consumer under the age of 21 unless he has submitted a written application to the card issuer that meets the following requirements:

• The signature of a cosigner, including the parent, legal guardian, spouse, or any other individual over 21 with the means to repay debts incurred by the consumer on the account.
• Financial information indicating the person under the age of 21 has the ability to independently repay the debt.
• If a parent or other adult has cosigned a credit card to someone under the age of 21, the card issuer may not increase the credit limit on the account without the cosigner’s written approval.

Prescreened credit offers may not be sent to those under the age of 21 unless they have opted in with credit reporting agencies.

Colleges and universities must publicly disclose contracts or agreements made with a card issuer or creditor for the purpose of marketing a credit card. What’s more, card issuers and creditors may not offer a student at an institution of higher education any tangible item to get them to apply for a credit card if the offer is made on or near campus or at an event sponsored by or related to the college or university. Colleges and universities will also be encouraged to limit on-campus marketing of credit cards and offer credit card and debt education and counseling sessions as a part of orientation.

In addition, creditors will be required to submit a report to the Board describing the terms and conditions of all business, marketing and promotional agreements and college affinity card agreements with colleges and universities, alumni organizations, or foundations affiliated with or related to such institutions, with respect to any college student credit card issued to a college student at such an institution.

The Comptroller General of the U.S. will from time to time review these reports and periodically submit a report to Congress on the impact of these arrangements have on credit card debt. The Comptroller General will make legislative or administrative recommendations it determines to be appropriate.

because of the above reasons it will positively impact on credit card borrowers of FI/BANKS.