The new law goes into effect in February 2010 and bans many practices, including increasing interest rates on existing balances, a practice that was the bread and butter for many credit card companies.
Critics of the new law have cited the fact that there was an eight month period between the time the act was signed into law and the effective date. This gave the banks plenty of time to increase interest rates before the law went into effect.
It seems as though Bank of America is the first major bank to take this action. However, it doesn't seem that they did it purely out of concern for their customers. It's more likely a reaction the public outcry against the recent spate of interest rate increases to good customers. The fact that House Financial Services Committee Chairman Barney Frank (D-Mass.) is having a hearing to evaluate the possibility of moving the effective date of certain portions of the new law up to December 1, 2009 may also have something to do with it. (The hearing is scheduled for October 8th.)
Regardless of their reasons, in taking this action, Bank of America is doing something that is good for many of their customers. As the second largest credit card bank in America, I'd expect that other banks may quickly follow suit.
For many more details on the provisions of the Credit CARD Act, please visit our CreditGumbo.com blog.
Labels: APR Increases, Credit Card
