Over the weekend, you may have received a letter from your credit card company about the Credit Card Accountability, Responsibility and Disclosure Act (http://www.whitehouse.gov/the_press_office/Fact-Sheet-Reforms-to-Protect-American-Credit-Card-Holders/). My bank sent me a list of the changes and included the effective date – February 2010. This Act was signed by the Obama Administration in May of this year, but I forgot about it until now.
This change to policy will be helpful to borrowers who struggle to make payments on time and suffer rising interest rates. It also forces credit card companies to apply payments to the debt with the higher interest rate first rather than pay off the teaser rate. I am hoping this will finally give those who find themselves continually stuck in the cycle of debt, a real chance to get ahead.
One of the changes, my favorite of all, is the restriction on issuing cards to those under 21. My first card was peddled to me on my college campus at the ripe old age of 19. I got in the habit of spending more than I made and by 21, I was more than $2,500 in debt.
Of course there is still a down side to this – I read an interesting article about how the changes will affect those who are careful with payments and are ‘good’ borrowers. It doesn’t look good! Check out the article at: http://www.associatedcontent.com/article/1791592/us_credit_card_issuers_must_prepare_pg2.html?cat=3
Regardless, I think this change will be good for those seeking to become debt free.