Nowadays most of the people own credit card facilities. Card holders are provided various facilities by companies that issue these cards. Various reforms have been made in terms of card usages which have benefited credit card holders tremendously. Consumer protection laws have been passed in terms of interest rates, credit facilities and fees. Most of the reform laws are easy to comprehend and involve better facilities for card holders.
According to the latest reforms, cards are issued only to people with a considerable amount of balance. It is less accessible to people with low income and bad credit. According to the CARD Act, millions of card users are protected from increasing interest and have sufficient time to pay their bills.
New Rules For Credit Cards:
Right to reject: With the introduction of new reforms, card holders have the privilege to reject certain major changes in their accounts. Holders are free to close their accounts and pay the due according to the old terms of law. They are also given a time frame of five years to pay off the balance amount and credit card holder case is also plays an important role.
Restricted hikes in interest rates: Hikes in interest rates are allowed only under certain conditions which include late payments made by the card holder. Changes in the accounts need to be addressed to the card holders prior to 45 days. The interest rates of any new transactions can be increased only after the first year.
Restricted credit to young adults: Card issuing companies are banned from issuing cards to people under the age of 21. They are issued cards if they provide relevant proof of loan repayment capability.
Universal default: The practice of Universal default, which includes raising the interest rates according to the payment records of the customers, has been terminated according to the new reforms.
Additional time to pay bills: Card holders are given additional time to pay their monthly bills. Before the enforcement of new reforms, most of the card holders experienced changes due dates and less time to pay the bills.
Clear due dates: Card issuers are not allowed to set arbitrary dates or times as payment deadlines. Payments due during weekends, holidays and other days when the card issuer is closed should not be subject to late fees.
Minimum payments: The card holders must be made aware of the consequences of making minimum payments every month. Relevant information should be provided to the card holders as to how much payment should be remitted to the account to pay off the balances within 36 months.
Restriction on late fees: Occasional late fees are charged at a fixed rate. The rates can be increased if the card holder makes late payments more than once in a period of six months.
Double-cycle billing: With the enactment of new reforms, card balances and interest rates are not computed on the basis of previous bills. So there is no double cycle billing which can prove to be a financial loss to consumers.
The new laws and reforms have proved to be beneficial to credit card holders in more ways than one.