Advantages of credit card law

Posted by Kevin on Jul 5th, 2010 | no comments home title

Are we safe while using the credit card? Do we have any idea about the law that is being implemented by the governing bodies to safe guard us from the evil practices of the credit card companies? If you try to cushion yourself with the knowledge of credit card law then this article would throw some light to enhance your ability to judge the benefits of this law.

The retroactive rate increased:

The card issuers are not suppose to increase the rates unless and until the promotional rate expires. According to the practice of universal default clauses you are not accountable to any penalty charges for late payment on unrelated account.If you are late by 60days in the repayment plan then you might be exposed to the default rate. But if you provide with an evidence that you have made 6 months of consecutive payment on time then you can expect the bank to lower the rates of the cardholders.

Advance notice of the hike on rates:

According to the current truth in Lending Act only 15 days notice is given to the card holder before the implementation of any plan. If there is any change in the terms of the contract which includes the hike in the rate that needs to be notified before 45days. In case there is any change in the credit limit then it might not be applicable under this. An advance notice is not required if the card issuer lower the limit of your card.

Restriction on charges:

An over limit fee would be charged on the approval on the over limit agreement by your creditor. Banks are not suppose to levy any charges on you to settle credit card debt. But they can contact you for repayment through telephone or Internet. A penalty can be charged on your outstanding balance just to quicken the repayment process. If the bank fails to accept the payment by mail then they might not levy additional charges for it. If the payment is made in the local branch office then it would be advisable to pay off the amount before the due date. Any delay in the payment in this process is charged with a late fee.

The students restrained from using the card:

If you are below 21 years of age make it a point to provide a proof that you are financially stable before applying for a credit card. If you are unable to produce an evidence of your income then a co signer is required above the age of 21 years. As the youngsters fail to use the card responsibly, so the law has been designed keeping the attitude of the youth in mind. This law would save the youngsters from the snare of debt. It has been structured to save from the pitfalls of debt which has come due to lack of knowledge of the young people in the field of finance.

End of double cycle billing:

The new law banned the double cycle billing. Before the law was implemented the card issuer could charge interest rate on the amount that had been paid off the previous month.

These are the few advantages of the new credit card law that came in to force and this also shields the client from the torment of the credit card companies.