Obama Credit Relief Plan
Back on August 20th of last year, the federal government introduced the Obama credit card
debt relief plan, which became law yesterday. These new rules have been put in place to protect consumers and give them fair warning before new fees are charged or their interest rates on their credit cards are raised.
Here are some of the highlights of the bill: Credit card companies are now required to give 30 days advanced notice before changing a contract. Therefore, companies that issue credit cards will now be required to give you at least a 45 day warning. If you, as a consumer, do not want to agree to the new terms, you do not have to. At that time, you will be given five (5) years to pay off your balance at your existing rate. Of course, if you do not agree to their new terms you will not be able to make any additional charges on your card as they will close it.
Secondly, Credit card companies will now be required to put their bills in the mail 21 days before the due date instead of the current 14 days. This will give the consumer more time to pay those bills and should lessen the likelihood of being late with their payments.
Thirdly, companies that issue credit cards will no longer be allowed to raise interest rates on the consumers existing balances unless those people are 60 days or more late with their payment. This is great for people with large balances as they can at least now know that the interest rate on that money will not be increased.
Finally, the new law will require that anyone who is 21 years of age or younger must have a cosigner to get a credit card. This will have a major impact on credit card companies and college campuses. In addition, creditors will only allow smaller credit limits. Also, interest rates will not be allowed to be raised in the first year for anyone unless there is a specific provision for that in the contract.
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