In case you haven’t heard the news, President Obama signed a piece of legislation last week that calls for credit card companies to afford its current customers a bit more leeway. Here’s a quick breakdown of what it does:
- A card’s rates cannot be increased because a cardholder is late on a separate debt.
- Credit card companies must notify you 45 in advance of any rate hikes.
- You must be at least 60 days late on payments for them to raise your rates.
- After six months of dutiful servitude (on-time payments) they have to set your rates back to what they originally were if you received a rate hike due to late payments.*
- If you’re under the age of 21, you must prove that you can pay your debts yourself or get the card co-signed by a parent/guardian.**
*I’m skeptical that they’ll actually revert your rates proactively. Most likely you’re going to have to call in after six months to “remind” your credit card company that you’ve been a good boy or girl for half a year.
** Make of that what you will. Maybe the government wants to forcibly mitigate the credit card companies’ risk? I’m not sure why this part needed to be written into law.
The new rules take effect in February of 2010.