Obama administration praises credit card reform
A new series of reforms aimed at protecting consumers marks a turning point for Americans.
Effective February 22, the second set of provisions under the Credit Card Accountability, Responsibility and Disclosure Act of 2009 prevents lenders from charging over-limit fees unless cardholders agree to allow such transactions. It limits credit card availability for people 21 and under, a group often targeted by credit card companies.
It also increases the information available on monthly bills to include a toll-free number where cardholders can reach credit counseling and debt management services, as well as a timetable for how long it would take to pay off debt with minimum payments. These moves shift the power back to the consumer, according to the statement.
“These new rules don’t absolve consumers of their obligation to pay their bills, but they finally level the playing field so that every family and small business using a credit card has the information they need to make responsible financial decisions,” Obama said.
Treasury Secretary Timothy Geithner also praised the reform, saying it would help families understand the rules and payment processes imposed by credit issuers. He pointed to future work that could be done, including the creation of a Consumer Financial Protection Agency to consolidate the power of separate agencies into one independent unit.
“We continue to work on strengthening consumer protections and disclosure for a wide array of financial products,” Geithner said.
Further provisions from the Credit CARD Act will become effective this summer. Starting August 22, the third part of the law is expected to ensure that penalty fees and increases established since January 2009 are reasonable and proportional. It will also require that certain gift cards have at least a 5-year life span, and eliminate declining values and hidden fees.
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