A Guide to the Latest Credit Card Reforms

The Credit Card Reform Act of 2008 was passed on December 18th, but it isn’t expected to take effect until includes the following provisions:

Interest Rates

Credit card issuers will be prohibited from raising the interest rate on existing balances. They will also be prohibited from raising their interest rate under the premise of “universal default”. That is, if you get behind on your payments to one card issuer, other creditors can’t raise your interest rate as a result. Also, creditors will be required to apply a customer’s payments to the highest-interest balance first, rather than applying it first to balances with lower interest.

Advance Notice

Right now, credit card companies reserve the right to change your interest rate at any time, for any reason, with as little as 14 days’ written notice. The Credit Card Reform Act states that creditors must give customers a reasonable amount of notice before changing their interest rate. After the credit card reforms go into effect, 45 days will be considered sufficient notice.


One major complaint from card holders is that their billing statements are difficult to understand. The credit card reforms seek to change that by requiring creditors to highlight changes and give a summary of payments and interest to date. Also, due dates will be printed in bold or highlighted, letting card holders know the exact day and time when their payment is expected.

Late Payment Penalties

Some customers have been surprised to see their balances accrue sky-high penalty interest rates because of one late payment. Some companies hike their rates as little as one day after the payment due date. This practice is prohibited under the credit card reforms. Now, creditors will have to give their card holders a minimum of 21 days to come up with their late payment before penalty interest begins. Also, customers will have at least three weeks’ notice before terms can be changed.


Temporary holds, such as those placed by car rental agencies or hotels, will no longer push a card holder’s balance over the limit. Therefore, these types of holds will not be able to incur “over the limit” fees.

These credit card reforms have been lauded as much-needed changes to the credit industry. The Federal Reserve first proposed these changes in May, and received an overwhelming response from more than 62,000 card holders who supported the reform.

The downside to this legislation is that credit card companies might reduce their offers and hike up introductory interest rates. To apply for a low interest credit card now, visit BestCreditCardRatings.Com.


Credit – Users of Reports

Users are individuals, businesses, agencies, or institutions that request consumer credit files from credit reporting agencies to determine creditworthiness, among other things. Under the FCRA, they can utilize credit report information to determine creditworthiness or in consideration of employment and certain types of insurance. (Life insurance underwriting policies can consider credit history, whereas medical insurance […]