Credit Card Bill goes into effect Monday - KLTV.com - Tyler, Longview, Jacksonville |ETX News

Credit Card Bill goes into effect Monday

By Philippe Djegal - email
Posted by Ellen Krafve - bio | email

TYLER, TX (KLTV) - Credit experts say the Credit Card Bill of Rights will provide necessary checks and balance to the credit card industry.

"It's going to effect all of us," said Dr. Harold Doty, Dean of Business and Technology at U.T. Tyler.

The Credit Card Act of 2009 addresses several key points. First, credit card companies are now banned from unfairly raising interest rates.

"The government's telling credit card companies, 'You've got to get rid of the tricky stuff.'" said Doty.

Second, credit card companies are required to give cardholder 45 days notice of any interest rate increases.

"I think what's more important, though, is if you decide to cancel a credit card because of a fee increase, they can't raise the rate," said Doty.

Dr. Doty says, the bill also gives consumers the option of setting hard credit limits.

"Which means, if I've got a $5,000 limit on that credit card, if the purchase takes it over 5,000, they deny the purchase," explained Doty. "So, I know what my limit is instead of having it raised."

Every year, Americans, pay around $15-billion in penalty fees. According to the White House, nearly 80% of American families own a credit card. But, some fiscal experts believe that tighter regulations on credit card companies will force them to be reluctant to lend in the future.

"There will be a reduction in the availability of credit by about $2-trillion and that hurts Americans who need credit," said Scott Talbott.

For example, college students under 21 who may now be forced to use a co-signer to apply for a credit card, which Dr. Doty says isn't necessarily a bad thing.

"To the best of my knowledge, no credit card company has ever held a gun at somebody's head and said you have to take my credit card," said Doty. "So, fundamentally, it's still the responsibility of the individual - not the credit card company or the government."

The bill goes into effect on Monday, and it will apply to new and existing credit contracts.

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