The Credit CARD (Card Accountability, Responsibility and Disclosure) Act was designed to protect credit card consumers and combat the increasingly unethical tactics of some credit card lenders. But in our legislators' effort to please both consumers and credit card lobbyists, they left some gapping loopholes that credit card lenders can use to get around the new restrictions. Let's take a look at a few:
- While the Credit CARD Act prohibits credit card lenders from raising your interest rate whenever and however they like, they do have right to raise your credit card's interest rate one year after the credit card is first opened. But of course they must give a 45 day notice; but your only way out of the interest rate hike is to close the account. Furthermore, if you charge something to the credit card 14 days or more after you receive the interest rate hike notice, the new purchases will be impacted by the new interest rate.
- Interest rate restrictions only apply to fixed rate credit cards, so some credit card lenders are doing a switcheroo on credit card consumers. Some debtors with fixed rate cards may find that their accounts have been changed to variable rate credit cards. Credit cards with variable rates are subject to an interest rate increase at any time.
- The Credit CARD Act requires that credit card grace periods extend for 21 days after the statement date. The credit card grace period is a period of time where there is no interest charged, so some credit card lenders are now eliminating the grace period all together so that they can charge the consumer interest immediately after they make a purchase.