New Credit Card Laws

The Credit CARD Act of 2009 was recently signed into law by Barack Obama. This law will come into effect February 22, 2010 and focuses on three main areas: consumer disclosure, consumer protection, and young consumer protection.

The first part of the law is meant to prevent some of the deception undertaken by credit card companies. Now, they must make it clear what the interest rates and principal payments will be if the cardholder only makes the minimum payment per month and how long it will take them to pay off their balance. In addition, deadlines and dates must be clearer and bills must be sent sooner before they are due.

The major part of the bill that will affect consumers is the new protection. The interest rate on a card cannot be changed as easily. Companies cannot change the interest rate within the first year of issuance, and promotional rates must last at least six months. After that, they can change the rate with 45 days’ notice, up from the current 15. If you do not pay for over two months, then they can still increase the rate – but if you pay on time for the next six months, then they must lower the rate back. Now, credit card companies cannot charge an overdraft fee unless you specifically allow a transaction to overdraft rather than be declined. Similarly, they cannot charge as many fees per payment cycle, with a maximum of one overdraft fee and a fee limit of 25% of the credit card limit per cycle. There is also a section on gift cards, which must last at least five years with a clear expiration policy and cannot have an inactivity fee unless the inactivity period was over a year.

Finally, there are some protections for young consumers. People under 21 cannot sign for a credit card without a means of income or an adult co-signer. Similarly, college students who share control of a joint account with an adult must receive permission in order to increase the limit on that account. Last, people under 21 must opt-in to hearing credit card offers and will be protected from pre-screened offers.

Kenneth Long
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Kenneth Long

President at Debtors Unite
Kenneth Long is President of Debtors Unite, Inc. as well as President and Vice Chairman for Vision Credit Education, Inc. He served as a regional coordinator for the North Carolina Saves campaign. Long co-founded the Wake EITC Coalition along with Family Resource Center of Raleigh.

Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.

Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.

In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.

Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!

Favorite quote:

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."

Thomas Jefferson
Kenneth Long
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