The countdown to credit reform
By Flicker user orphanjones
The consumer credit landscape will shift again next week when more provisions of the new federal CARD rules kick in.
CARD, or the Credit Card Accountability, Responsibility and Disclosure Act of 2009, was signed into law last May by President Obama and takes effect on Feb. 22, although some of its terms were implemented in 2009.
Here’s the full text of the law, which also is known as the Cardholder’s Bill of Rights.
Many analysts have summarized the key changes for consumers; this package from CreditCards.com is among the most informative. It offers an interactive guide, polls, video features – even a live countdown clock. I highly recommend signing up for CreditCards.com’s Twitter or RSS feeds for reminders and fresh news on reform implementation.
Here’s the White House fact sheet on CARD, which includes a handy summary of highlights, such as the abolishment of late-fee and over-limit fee traps, the end to certain rate-hiking practices, new requirements for easy-to-read statements and protection for gift-card purchasers.
In addition to reiterating the new rules, you might want to consider these stories using the Feb. 22 news peg:
Local card issuers. How will the new rules affect profit margins, internal costs, lending guidelines and promotions at local banks and credit unions? Any local retail chains issue credit cards?
Credit caveats. The new rules may help imprudent borrowers but they’re not a cure-all for spendaholics. Check in with reputable debt-counseling services about what they’re seeing post-holiday in terms of debt levels, customer demand, delinquencies and defaults. (Generally it’s best to stick to counselors affiliated with the National Foundation for Credit Counseling; the NFCC also offers educational materials on its Web site and is quite accessible for comments.) Sometimes groups like Debtors Anonymous will provide access to local members as well.
Comb bankruptcy filings for those heavy with charge-account debt and talk to filers about whether or not these new rules would have made a difference; while the legal changes do prevent lenders from piling on fees and obfuscating lending terms, they don’t address the making-ends-meet problem at the fundamental level.
Financial literacy. Easier-to-read statements will help but again, people without a fundamental understanding of compound interest – or even simple math – are at a disadvantage in the marketplace. Many lenders and professional groups (accountants, business faculty, planners) run financial literacy programs in schools and continuing education venues; sitting in on a few sessions can lead to great human-interest stories for the personal finance page.
