What the New Credit Card Rules Mean for You

Today, the Senate overwhelmingly passed legislation that aims to reform the credit-card industry. The bill marches on to the House and could land on President Barack Obama’s desk by the end of this week.

For more details about the rules passed by the Senate, our colleagues over at Washington Wire have specifics. Regular Wallet readers will recognize some of the items. Among them:

-A 45-day notice to consumers when terms are changed;
-A mandatory five-year life for gift cards;
-Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent;
-No more over-limit fees charged to consumers;
-Bills must be sent 21 days before the due date.

If passed by the House and President Obama in current form, the regulations will be among the most sweeping that the industry has seen. But keep in mind that the final version of the Fed’s credit-card rules this fall, despite a media frenzy, were watered down from their original versions in the end. This time around, the bill is expected to stay intact, however.

Consumers lately have received little love from their card issuers. As we reported a couple of weeks ago, none of 200 major credit-card companies are complying with all portions of the Credit Cardholders’ Bill of Rights, though those rules aren’t yet binding. Posted by Canadian Funding Corp. Read more HERE

Bill Changing Credit Card Rules Is Sent to Obama With Gun Measure Included

Posted by Canadian Funding Corp

But the credit card victory came at a cost that angered some backers of the legislation: approval of an unrelated provision allowing visitors to national parks and wildlife refuges to carry loaded weapons if they are otherwise licensed to possess guns.

Congressional leaders and administration officials decided not to contest the gun measure propelled by Senator Tom Coburn, Republican of Oklahoma, to avoid delaying credit card legislation that the White House wanted as an important symbol of the administration’s push for economic relief for consumers.

Final House passage of the credit card bill by a margin of 361 to 64 followed Congressional approval earlier this week of an increase in federal resources to pursue financial fraud and another measure that would make it easier for financially pressed homeowners to seek changes in their mortgages. Mr. Obama signed those bills on Wednesday and was planning to act quickly on the credit legislation.

“These are important reforms to protect consumers and to bring some common sense, rationality into our financial system,” Robert Gibbs, the White House spokesman, said Wednesday.

At the same time, the Senate on Wednesday approved a measure to overhaul Pentagon contracting and the House is set to do so Thursday, setting up another bill signing on an initiative sought by Mr. Obama.

A top White House official said completion of the consumer bills would allow the Obama administration and Congress to concentrate on health care, energy and spending issues in the critical summer months. Read More HERE

What the new credit card law means for you

Now that lawmakers have finalized a federal law to protect millions of consumers who rely on credit cards, it signals a new era of managing credit.

The new normal for credit cards may be more transparent and easier to understand for everyday Americans. Credit card issuers and credit industry analysts say the new law will make credit cards more costly for all users and unaccessible for low-income families. Look for the return of routine annual fees, fewer rewards cards and the possibility that credit card bills will be payable immediately rather than after a month-long grace period.

The new normal
The passage of the bill came swiftly, with the Senate May 19 and the House OKing it May 20 and President Barack Obama signing it May 22. Read the act.

What will the credit card law mean for cardholders? Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and fewer penalty fees, late charges and interest payments. Once in effect, the law will also fundamentally change the way credit card issuers market, bill and advertise credit cards.

Here are the highlights of the law:

Limited interest rate hikes: Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days' advance notice of the change.

No more universal default: "Universal default," the practice of raising interest rates on customers based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), would end.

Posted by Canadian Funding Corp View more

New credit card rules to protect consumers

Posted by Canadian Funding Corp
WASHINGTON - Federal regulators on Thursday adopted sweeping new rules for the credit card industry that will shield consumers from increases in interest rates on existing account balances among other changes.

The rules, which take effect in July 2010, will allow credit card companies to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances.

They were approved Thursday morning by the Office of Thrift Supervision, a Treasury Department division. The Federal Reserve and the National Credit Union Administration were expected to act on them later in the day. The changes mark the most sweeping clampdown on the credit card industry in decades and are aimed at protecting consumers from arbitrary hikes in interest rates or inadequate time provided to pay the bills. full story here

A look at Credit Card Regulations in Canada and USA

Canada

With economists worried about the threat of massive amounts of credit card defaults, the Canadian government announced they are looking into new regulations to protect consumers. Finance Minister Jim Flaherty made the announcement Wednesday but did not specify the exact regulations, such as interest rate limits, the government is considering.

"There are a number of issues we can address with respect to credit cards," Flaherty told reporters. "We have regulatory power and we're working on certain regulations, which I'll be able to speak about publicly soon."

He did not answer questions on interest rate limits. Visa and MasterCard make up 94 per cent of the credit card market in Canada. The heads of the Canadian branches of those companies appeared before the Senate banking committee on Wednesday to argue against regulation. They pushed to enter the debit-card industry, which takes funds directly from a consumer's account -- a market that is dominated by Canada's charted banks.

The entry of the credit card giants into the debit market is being opposed by the Canadian Federation of Independent Business and the Retail Council of Canada as they fear merchants' fees will go up. "This is of great concern and we don't want Visa and MasterCard to do to debit what they have done to credit," Diane Brisebois, president of the Retail Council of Canada, told CTV News.

Brisebois says that merchants are outraged with credit card companies, saying they've seen seven increases in fees over the last 18 months. Brisebois said with debit cards in Canada there is a flat processing fee of eight cents per purchase.

Liberal senator Pierrette Ringuette noted that in North Carolina a typical $500 purchase equals a fee of $7.72 for Visa and $8.39 for MasterCard. "Do you want to do the same thing in Canada?" she asked. Visa president Tim Wilson said it was "dangerous" to make assumptions about what the company would do in the Canadian market.

Kevin Stanton, the president of MasterCard, said that the entry of the credit card companies into the market would mean better choices for consumers. The pair also said Canadians could use debit cards worldwide with their companies, as well as online.

USA

Senate Moves Toward Vote on Credit Card Regulations. The Senate is moving at this hour toward a vote on new restrictions on credit card issuers designed to regulate what the companies can charge consumers.

The so-called "credit card bill of rights," as sponsored by banking committee chairman Sen. Chris Dodd (D-Conn.) would force credit card companies to first apply customer payments to the parts of their bills bearing the highest interest. It would also force companies to notify card holders of interest rate increases 45 days in advance of their implementation. It would prevent companies from retroactively raising interest rates unless a customer's bill was more than 60 days past due. And it would prevent a card issuer from raising rates on a customer if that customer was behind on payments to another lender.

The Senate did step in and block an amendment by self-described socialist Sen. Bernie Sanders (I-Vt.) that would have capped the interest rate card issuers can charge at 15 percent. The Senate is expected to pass the bill. The House has already passed its version of the bill, and the two will be reconciled in committee before being sent to President Obama, who has called for restrictions on credit card companies.

Canadian Funding Corporation’s Review of the Credit Card Crisis

Canadian Funding Corp Review and Comments by Moishe Alexander On the Relief Urged for Indebted Canadians and the New Rules for US Credit Card Industry

December 22, 2008

Canadian Funding Corporation’s Review on the New Rules for US Credit Card Industry and Relief Urged for Indebted Canadians

It was reported in the Toronto Star on December 15, 2008 that Kevin Leonard, an associate professor at the University of Toronto said that Canadians who fail to pay their credit card bills on time can be slapped with interest rate hikes, and said such hikes should be regulated. He went on to say that Canada needs a new consumer watchdog to look out for the best interests of credit card users and to keep consumers informed of credit terms and conditions.

Moishe Alexander, President of Canadian Funding Corporation recommends that the Canadian Government implement the same credit card reform that the US Federal Reserve is currently considering and voting on.

Banking regulators in the US are expected to prohibit credit card companies from increasing interest rates and penalties on a whim with prohibitions being implemented that would prevent any credit card company from increasing interest rates or imposing penalties until after 30 days has elapsed from a past-due credit card bill.

The new US rules on the credit card industry is to prevent any increases on current balances and will hopefully prevent any further or deceptive practices that are being currently carried on by credit card companies.