What has the credit card act of 2009 done so far? In the eyes of many, it has provided a number of benefits. The relationship between consumers and the credit card companies has been a love/hate relationship.
Through the ability to borrow petty cash via a credit card account, many that lacked liquid cash to make purchases were able to do so. This certainly helped the economy since it opened doors to those that would have otherwise been excluded.
Unfortunately, complexities arose from decades of credit card use and misuse. Claims of predatory lending and outrageous hidden fees and variable interest rates were heard. In Congress, action was taken to address public concerns over how the credit card companies operate. This led to the passage of the new credit card law.
Some are not exactly thrilled at the passage of the law, claiming it has its flaws. Such concerns are valid as no omnibus law will be without its problems. However, there are five major benefits (among other benefits) found within this restricting of how credit cards operate.
Five of the Top Benefits of the Credit Card Act
Higher Interest is Paid Off First
Cash advances may come with a high APR than normal purchases. In previous years, when you made a payment to the credit card company, the payment would be directed towards the lower APR purchase. This is no longer the case as the law mandates that payments be directed towards the higher APR which aids in paying off the balance of the credit card much more quickly, or at least that is the intention.
The Issuance of a Bill
Traditionally, a bill was sent within 14 days of the due date of a credit card payment. That has been now amended to mandate a 21 day minimum. This may seem minor on the surface but it really has much value. The earlier you are informed of the due date on a credit card payment, the smaller the chance that you will miss a payment.
The Student Gambit
There are restrictions on issuing credit cards to students. This can be considered a benefit both to the student and the student’s parents. In the past, those under the age of 21 were targeted for credit cards. Unfortunately, young adults were not always aware of how credit works and would quickly load themselves up with credit card debt. Obviously, the debt would have to be paid off at some point and this could take years.
Advance Notice of Rate Hikes is Increased
No one likes to be blindsided by rate hikes and now a more warning is provided when a credit card’s rates are scheduled to be increased. The law now states that 45 days advance notice must be provided when rates are to be increased. Since 45 days gives the account holder ample time to refinance with another lender, many credit card companies might even opt NOT to increase rates.
Fees are Restricted
No one likes to pay credit card fees. This is fairly common knowledge. However, there will be fees associated with the use of credit cards. However, predatory, hidden and excessive fees have been limited by the new credit card law.
This will put more money into the pocket of the consumer as opposed to the lender. Granted, the lender may need the fees to cover operating expenses. Yet, when the fees are excessive, they serve little purpose other than exploiting the borrower. While there has been some controversy about the credit card act of 2009, there have been numerous benefits associated with it as well.