How does the CARD act impact me? How does CARD act affect consumer financing

In May 2009, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act of
2009, sweeping credit card reform legislation that marks the most significant changes in industry
history. This new law will change card practices and business models, reshaping the way consumers
have access to and use their credit cards.

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Changes in Interest Rates

• Prevents interest rate increases and universal default on existing balances � the repricing of interest rates on previously borrowed money has essentially been eliminated;
  

• Prevents rate increases within the first year after a card has been opened and requirespromotional rates to last at least six months � this locks in the terms on card borrowing for a longer period of time;
  

• Prohibits double-cycle billing, a practice that involved charging interest on a loan taken during prior billing cycles under certain circumstances; and
  

• Requires payments above the minimum to be applied first to balance with the highest interest rate. This arises, for example, where a consumer has transferred a balance from another card that is subject to a low rate and has made new charges on the new account that are subject to a higher rate of interest.
  

Changes in Fees

• Prohibits over‐the-limit fees unless the cardholder elects to allow the issuer to complete overlimit transactions, offering consumers more control over such fees, but raising the possibility that such over‐the-limit transactions will be denied;
  

• Prevents issuers from charging a fee to accept a payment except in expedited circumstances; and
  

• Requires gift cards to have a minimum life span of five years, while placing limits on certain fees.

Changes in Disclosure

• Requires full disclosure of late payment penalties and for card agreements to be posted on the Internet. When coupled with the complete re-write of card disclosures mandated by federal regulators, this will result in greater transparency and customer awareness over the terms of their credit card contract;
  

• Requires 45 days notice of interest rate, fee and finance charge increases;

• Requires issuers to provide individual consumers with account information that discloses the period of time and total interest it will take to pay off the card balance if only minimum monthlypayments are made; and

• Requires bills to be mailed at least three weeks before payment is due.

Credit Availability for Students

Since credit card companies will be prohibited from issuing cards to customers under 21 without a cosigner
or proof of ability to repay, credit for students will be drastically limited. This will inconvenience
millions of young adults who use their cards responsibly, while making it take longer for many to build
up a credit history that is necessary later in life.

Changes for Young Adults

• Requires issuers extending credit to young consumers under the age of 21 to obtain a co-signer or proof that the applicant can make the payments.
  

As the industry works to enact these changes, it is important to understand the full scope of the modifications and the effect they will have on consumers. While consumers will benefit from improved transparency, there are also some unintended consequences that affect the availability and cost of credit. For example:


Annual Fees Will Be More Commonplace, Limiting Perks

Customers will likely see annual fees become more common, while reward programs such as airline
miles or cash back rewards may be limited. Also, since promotional offers will both be paid back
differently and be required to last at least six months, cardholders will see fewer offers with
introductory low interest rates.

Limiting Credit, Lower Limits

With this new one-size-fits-all approach, card limits will be lowered since lenders will be limited in
managing risk going forward. Even customers that have a good credit score or have never missed a
payment will likely see less credit available to them.


Higher Interest Rates for All

The new legislation restricts the ability of credit card companies to price based on the individual risk of
the customer. As a result, the system becomes a one-size-fits-all model, meaning that interest rates will
likely increase for nearly everyone, including those with a good credit history, as those who successfully
manage their credit will be subsidizing those who have not.

Limiting Customer Flexibility

Many customers may also have less flexibility in how and for what they can use cards (e.g. limits will be
lower for many, so credit cards can't be used for large purchases or unexpected medical and other
expenses) and have fewer options in how they repay.
Restricted

Smarthome & Theater Systems works primarily in the state of Connecticut.  We cover the entire state from the greenwich, darien, westport, fairfield area up north to farmington, west hartford, glastonbury area and up the shoreline to branford, guilford, madison and clinton.  We have traveled as far as the litchfield hills, marlborough and near the casino at montville.

Check out what we can do for you.  Visit our website: www.iwantatheater.com