For those who are struggling with substantial credit card debt, recent changes in credit legislation just might bring some needed relief. In particular, the credit card legislation, taking effect during 2009 and 2010, provides cardholders with more rights as they interact with the credit card company and places significant restrictions on credit card companies. Unfortunately, there is no government program for removing credit card debt altogether, but the new legislation allows struggling cardholders some debt relief options.
Increased Consumer Notice
In the past, credit card companies have reserved the right to make changes to a cardholder's contract without sufficient notice to the cardholder. Under the new law that went into effect in August of 2009, however, credit card companies are now required to give consumers at least 45 days notice before making changes to a credit card contract. What is more, consumers have the option of refusing to agree to the change in contract. If a consumer chooses to reject the contractual adjustment, he or she has up to five years to pay off the credit card at the rate that was stated in the original contract. Experts warn that this might mean a cardholder will then have to make higher monthly payments in order to pay off the card in five years, but the upside is that the cardholder will at least have a choice should the credit card company decide to change the contract.
Bills Sent Earlier
In addition to increased consumer notice, the new law requires credit card companies to mail statements out a full three weeks before the payment is due. This will provide cardholders with enough time to review the statement, and it will ideally give cardholders at least one paycheck period with which to acquire the money that might be needed to make the payment. Previous laws only required that bills be sent two weeks before the due date. Additionally, the extra week will help prevent late payments should cardholders be struggling to find the cash to make the payment.
Restrictions on Interest Rates
Starting in February of 2010, credit card companies can no longer raise the interest rate on a credit card balance unless a cardholder has gone a full 60 days without making a single payment. This ultimately means that cardholders who continue to make consistent, on-time payments will not have to worry that their outstanding credit card balance will see an increase in interest rate as they are attempting to pay it off. For cardholders with a substantial existing balance, this comes as a significant relief; in the past, credit card companies reserved the option to raise the interest rate on an existing balance, meaning that a cardholder's monthly payment might go up considerably.