Monday, March 2, 2009

Not Everyone Included in New Credit Card Laws of 2010

Not Everyone Included in New Credit Card Laws of 2010

by: Debbie Dragon,, 03/01/09

Consumers are looking forward to the implementation of the July 1, 2010 credit card rules which are designed to prevent some of the nastier tactics of credit card companies. Because the credit card industry has such a long time to “prepare” for the new laws, many consumers in the meantime are getting slammed with higher interest rates, changes in due dates and decreased credit limits as the credit card issuers look to reduce their risks and prepare for the changes.

The changes that will take place in 2010 are the biggest changes made to the credit card industry in nearly 30 years. Regulators from the Federal Reserve, National Credit Union Administration and the Office of Thrift Supervision approved the changes in an effort to ensure the consumer protections stated by the Federal Trade Commission Act are being upheld. The Federal Trade Commission Act bans unfair and deceptive trade practices, and as any credit card user has probably experienced at one time or another – credit card practices are not always fair to consumers!

Not all consumers will benefit from the new credit card rules in 2010, though. While most credit card holders will receive protection from double-cycle billing processes, limits to how often and for what reason the interest rate can be increased, a set grace period for making payments without penalties and improved payment allocation so that additional payments will pay highest interest debt first – not everyone qualifies for these protections.

Commercial Credit Cards

Business credit cards are not considered “consumer” cards, and therefore do not receive the same level of protection. Whether you have a small, one person business or a large corporate company – the credit cards used for those businesses will not fall under the new protections to be implemented in 2010. Commercial cards are any cards used for business or corporations – including debit and prepaid cards, credit cards and store credit.

Businesses regularly rely on credit cards in order to improve their cash flow and grow their businesses. Unfortunately, if the credit card industry is forced to reduce deceptive and unfair practices on consumer cards, they may try to recover some of that lost revenues on business credit card holders who are not covered by the 2010 rules!

Returning Military

A teleconference was held in February to discuss the upcoming credit card requirements, with representatives from the Federal Reserve, National Credit Union Administration, Office of Thrift Supervision and Benjamin Olson – an attorney for the Federal Reserve in attendance. For more than two hours, the attorney and representatives answered questions from credit unions and credit card lending institutions regarding the 2010 rules.

A question was posed by a lending institution regarding returning Military personnel. Currently, there is a “Service Members' Civil Relief Act” that protects active military members while they're deployed by requiring credit card companies reduce interest rates on their credit cards to 6%. When the military members return home though, the rates are returned to their previous, usually much higher, amounts. In 2010, credit card lenders will be restricted involving when and how much interest rates can be increased for cardholders; and returning military personnel is not listed as one of the approved reasons to increase interest rates at this time.

The question stumped the Federal Reserve attorney and the situation is currently under review.

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