So This is Credit Card Reform?
The Credit Card Accountability, Responsibility and Disclosure Act (for short, the Credit Card Act) was passed on May 22, 2009. Its purpose is to finally reign in the unfettered usurious practices of credit card issuers who have made hundreds of billions of dollars in interest and fees from the public, regardless of the fact that credit is based on book entries rather than actual bank assets according to many official industry sources. After many congressional hearings took place over past years addressing abuses by credit card companies and the absence of consumer protections, finally an initial step has been taken to limit banking practices designed to create debt slaves out the vast majority of people. Strangely, the much-needed reforms won’t take effect for 9 months! This gives the banks plenty of time to gouge the public some more before their practices become illegal. What was Congress thinking? This only gives credence to Sen. Dick Durbin’s admission that “the banks own Congress”.
In any event, here are some of the changes to come:
The credit card act, effective Feb. 22, 2010, won’t slap caps on issuers’ rates and fees. But, it will usher in consumer-friendly changes, such as:
- No more universal default. Except under certain circumstances — for example, if a cardholder is 60 days or more late on a bill — card companies won’t be able to raise rates on existing balances.
- Consumers will get their statements at least 21 days before the due date, instead of 14 days, giving them longer to pay before late fees kick in.
- Issuers can’t charge over-limit fees unless the cardholder agrees to over-limit transactions.
- Annual percentage rates can’t be changed for the first year after a card account is opened, unless the person pays late by 60 days or more.
- Issuers must apply payments to the highest-rate balance first.
Although these changes will help the average consumer and end the days of carte blanche for credit card companies, it remains to be seen what loopholes will be found and taken advantage of by this ultra-powerful industry.
What’s clear is this: debt-oriented money will remain the standard in a continued economic downturn where hundreds of thousands of jobs disappear each month resulting in a continued decline in the standard of living, disabling millions in their ability to pay off debt. The financial system structured to subsidize the banks which are controlled by a privately owned central banking system, the Federal Reserve, remains in place. Real reform which is meant to create prosperity for the general public has yet to emerge. Achieving this goal is the task before us now.
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