Snap-O Fact #56

President Obama ended the Bush-era policy of protecting credit card companies when he signed the Credit Card Accountability, Responsibility, and Disclosure Act (May 22, 2009. For the first time credit card companies are prohibited from raising rates without advance notification, or arbitrarily if customers are paying bills on time (2010) * Note: In place of the old policy, new consumer protections were instituted and the industry’s predatory practices were banned.

According to the White House, Americans pay about $15 billion in penalty fees for credit cards each year. This means that consumers have to pay an additional amount of money they did not expect to pay. The President signed the Act in order to make consumer credit card transactions more fair and reasonable. The law focuses on four areas. First, consumer protection is emphasized to ensure consumers get what they pay for. Secondly, credit card companies are required to use plain writing/English in their contracts so that consumers understand the terms and conditions they sign. Thirdly, people should be able to meet their needs with credit cards without worrying about being taken advantage of. Finally, the whole system must be more accountable by strongly and fairly punishing credit card companies that take advantage of customers.