Credit CARD Rules Take Effect Yet Rates Reach 9-Year High

Another portion of the Credit CARD Act took effect on Sunday, Aug. 22, improving the rights extended to consumers who own credit cards and purchase gift cards. However, despite the improved rights, a report shows that credit card rates have reached a 9-year high. According to research firm Synovate, a unit of Aegis Group PLC, rates have increased 1.6 percent in a year’s time, which is the highest increase seen since 2001.

Rates Still Rising Despite Credit CARD Act

The Credit CARD Act (also known as the Credit Card Accountability Responsibility and Disclosure Act of 2009) was passed last year to begin cracking down on credit card issuers that were abusing customers with increased interest rates, unfair penalties and more.

With a grace period of months between the time the law was passed and when it was to take effect, many expected credit card companies to increase rates to get their final laughs, and it seemed to happen just that way. According to the research firm, in the second quarter of 2010, the average interest rate on existing cards reached 14.7 percent, which is a significant increase from 13.1 percent a year earlier.

Combating High Rates

As a part of the Credit CARD Act, issuers are now obligated to follow specific rules regarding rates, including:

The rule that just took effect on Aug. 22 included the credit card issuer’s obligation to conduct six-month evaluations rate increases by taking action.

The news of rate increases probably doesn’t excite many consumers into filling out a new credit card application. Hopefully now that the rules are in place, issuers won’t find loopholes to increase rates and impose fees as they have in the past.

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August 20, 2010 • Tags: Credit Card, Effect • Posted in: Credit Cards

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