Credit card changes

A Senate bill passed last week will bring a great number of changes to the credit card industry by early 2010.

The Senate vote went 90-5 in favor of the changes proposed in the legislation. The legislation is aimed at helping consumers by altering some industry practices also requiring more transparency by credit card issuers about fees and interest. Some of the changes include:

• Requiring a 45-day advance notice of changes in rates and significant contract changes
• Restricting the practice known as double-cycle billing
• Requiring a 30-day advance notice of an account closure
• Furthering restrictions on marketing to college students
• Requiring that payments above are applied to balances with the highest interest rates first (when different APRs apply to different balances with the same card)
• Restricting retroactive interest-rate increases to only those consumers who are at least 60 days overdue
• Requiring issuers to send bills at least 21 days before the due date

President Obama signed this measure, known as the Credit Cardholders’ Bill of Rights Act of 2009, into law late last week, so consumers can expect to see many changes int the credit card industry over the next year.

Recommended reading: Credit-Card Fees Curbed