The new law governing credit cards that mainly protects users from sudden interest rate bumps and fee impositions took effect just last week. The law extends the due dates of statement settlements to 21 calendar days while changes in policy or terms need to be communicated 45 days before taking into effect.
The law’s provisions, however, do not take effect all at once. By February 2010, companies will not be able to raise interest rates on existing balances unless the borrower is more than 60 days late – the common benchmark of declaring loans delinquent.
Another key date is May 22, 2010 where a provision that hasn’t got that much attention comes to effect. On that day, a study on the practices of credit card companies. Unknown to many, credit card companies monitor the spending habits of card holders primarily to evaluate credit worthiness.
Sudden changes in one’s spending behavior supposedly indicates changes in financial situation. They then use this to make modifications to your card’s terms such as raising interest rates and reducing credit limits. However, what’s unclear is what kinds of changes in the spending behavior constitutes what.
CreditCards.com believe that sudden cash advances, using your card at a second-hand clothing store, and gambling constitute the said questionable behavior.
Source: CNN
