Louisville Credit Card, New Legislation

By: EconomyWatch Content Team   Date: 30 January 2010

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In the past year, President Obama announced that new legislature would be going into effect, which is officially known as the “Credit Card Legislation Act of 2009”.  This new law is unique in that it consists of a Bill of Rights for consumers.  This means anyone with a Louisville credit card has better protection in several ways, one being that credit card companies, banks, and credit unions have a more difficult time increasing interest rates for cards.

In addition, the only way that the interest rate on a Louisville credit card or any state’s card would increase is if the individual is a minimum of 60 days past due on the card’s payment.  At that time, the issuing company is required to reinstate the interest rate that was offered when the card was first acquired but only if the cardholder has made payments on time for at least six months straight.

Another aspect of this new legislature is that in cases when an interest rate increase is warranted, issuing companies are not allowed to apply interest rate retroactively to balances on the card already in existence.  For instance if someone had a Louisville credit card with a balance of $3,000 and this person was advised that because a payment was late the interest rate was going to increase from 12.99% to 15.99%, it would only be added to any new charges above the $3,000.  Then, once the cardholder makes payments on time for at least six months in a row, the interest would again drop to 12.99%.

Even the way in which payments are applied to the Louisville credit card account or any state’s card is different.  In this case, the minimum payment required would still be applied as usual, with some going toward interest and fees and the rest to the principle balance.  However, the difference is that any overage fees would have to be applied to the charges with the highest interest rate.  In other words, if a higher interest rate were added for new balances over $3,000 as in the scenario above, the overage fees would only apply to the new charges.

This new legislature went into effect late last year and while many people believe it will make a significant difference in helping both consumer and issuing company, others feel long-term it is will put pressure on the credit card companies, banks, and credit unions to get eliminate some of the cards offered for people with bad credit.  Additionally, opponents of the new law still have concern that this will make it challenging for small business owners or startup companies to secure a Louisville credit card.

Another concern has been raised from merchants.  In this case, a number of retailers state that this new law will have an impact on volume of business over time.  The reason is that a store card is used instead of a Louisville credit card as a means of offsetting the price on the more expensive items.  With this, the consumer is offered a teaser rate, which might mean no interest or payments for a specific amount of time or by offering an instant discount.

Although this new law is still too young to know the long-term outcome for the person with a Louisville credit card, the issuing company, and the merchant, people still have concerns.  One of the greatest concerns, especially with today’s economy is that the law is going to cause merchants to do more in-depth credit reports on consumers.  Because of that, a greater number of people would not quality and for those that do, getting the information back from the credit bureaus could take several days opposed to minutes.
 


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