Issuers Raising Rates Ahead of Consumer Protections

Well, I don’t know about you but I got mine last week. I’m talking about a letter from my credit card company telling me that they are going to raise my interest rates. Millions of these letters in fact have gone out as the credit card issuers raise interest rates as the first of the consumer protections kick in this week.

The first provision of the Credit Card Accountability Responsibility and Disclosure Act (CARD) that was passed earlier this year goes into effect on August 20, 2009. That provision states that the credit card companies must send out their bills at least 21 days in advance of the due date.

Currently the credit card issuers are required to send out their bills 14 days prior to the due date. The extra 7 days is designed to give those cardholders that carry a balance from month to month more notice and hopefully it will mean fewer will get hit by late fees due to the post office not delivering their bills promptly.

The second provision, that will go into effect this week, will require that credit card companies give their customers 45 days notice prior to raising their interest rates. Currently credit card issuers are only required to give their customers 15 days notice before they can raise their rates.

All of the provisions of the act will fully go into effect by February 2010. The reason so many people are seeing hikes in their interest rates now is because the credit card companies want to get ahead of the new laws. No surprise there at all.

The only questions that remain are why didn’t the provisions go into effect immediately? Why such a long lag-time between when the bill is signed and when it actually goes into effect? Could it have been a deal worked out between Congress and the lobbyists of the credit card companies in which the credit card companies were given time to raise rates before the reforms went into effect? Just asking.

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