Credit Card Law Seen As A Problem Solver and Problem Maker

Credit Card Law

The Credit Card Accountability, Responsibility and Disclosure Act, otherwise known as the Credit Card Law, has helped a few problems of American cardholders, but raised others.

The law initially took effective in 2009 and has since eradicated card issuers ability to raise interest rates as they wantand the uneven distribution of payments on outstanding balances, and penalty rate hikes.

Studies by the Pew Charitable Trusts’ Safe Credit Cards Project, however, said there has now emerged late payment rate increase, use of penalty interest rates, and sharp increase in cash advance fees.

The study involved 12 of the U.S.’ largest banks and the 12 biggest credit card unions, and compared the results to similar studies made in 2008 and 2009.

Even though card issuers disclose when penalty rates will apply, they do not say by how much it increases monthly payments – which doubles or triples, Pew said. They encouraged the Federal Reserve to attend to this issue, by prohibiting high penalty interest rates.

It was also found in both banks and credit card unions that cash advance fees raised from 14% to 24 and 16 percent respectively.

Meanwhile, late fees still remain unchanged since the Credit Card Law was made effective.

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Posted by anitalancaster on Jul 28 2010. Filed under Featured News, Industry News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry