An interesting letter awaited in my mailbox when I returned home from a recent vacation. It was a plain white envelope with Chase printed in the return address. After some thought I figured out that it was a response to a recent credit card application that I submitted before leaving. But something was different about this letter. I examined it, checking for the infamous flexible piece of plastic within.
It was thin and appeared to contain only a single piece of folded paper. I quickly opened the letter and started to question what may have possibly gone wrong. Is there a problem with my credit? Maybe they are sending the card separately? Maybe this isn’t the letter I thought it was?
After opening the envelope and unfolding the letter I read:
Thank you for your interest in our visa platinum credit program. Your application was given thoughtful consideration…
“We have determined that the projected costs of maintaining this account would exceed anticipated earnings.”
I could not believe my eyes! I was denied an extremely high interest gas rewards credit card because I am one of the few who use credit cards responsibly. Apparently they took a look at my credit history and figured out that I always pay off my balance and have never paid a nickel of interest. The rejection of my application was a result of the recently signed CARD Act.
On May 22, 2009 president Obama signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act.
The objective of this act is to protect Americans from deceptive practices that some creditors use. Part of this act states that creditors must now use plain language when explaining credit card terms. In other words they must now dumb it down for your average “Joe six pack”. It also places limits on how often rates can change and gives more time (21 days from mailing) to pay your balance.
Here are a few more highlights of the act:
-card issuers must clearly disclose how long your card will take to pay off if you were to pay the minimum payment along with amount of principal and interest paid.
-People applying that are under the age of 21 must have a co-signer
-People under age 21 will be protected from prescreening
-Interest rates are not to increase in the first 12 months
- Promotional APR must be offered for minimally 6 months.
The entire act can be read at http://www.whitehouse.gov/the_press_office/Fact-Sheet-Reforms-to-Protect-American-Credit-Card-Holders/
Most of these rules will take effect in February 2010. The fact is that credit card companies unfortunately make the their money from people with less than average common sense. Credit card issuers are now scrambling for ways to make up for anticipated loss of revenue. Keep an eye out for changes to your current credit cards terms and conditions. Such changes will come in the form of taking away rewards and incentives, charging a higher APR, or even charging annual fees.
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