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The law does:
The law doesn't:
These two are confusing me. Why would we need the ability to opt out of rate hikes and close accounts to pay off the current balance if they are unable to raise the rate on existing balances?
The entire Credit CARD Act of 2009 may be referenced here:
http://www.govtrack.us/congress/billtext.xpd?bill=h111-627
@DI wrote:The law does:
- Restrict cards for people under 21 without an older cosigner or proven income
‘(ii) submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account.
Sounds like stated income would be sufficient.
@DI wrote:The law does:
- Require banks to apply payments to the balances with the highest interest rate first
Actually requires banks to apply only the amount which is in excess of the minimum payment to the highest interest rate balance, an important distinction that always seems to be missed in the news articles. Whatever the minimum payment amount is (2% or 5% or whatever) still gets applied wherever the bank chooses, which will usually be the lowest APR balance ...
@Anonymous wrote:
@DI wrote:The law does:
- Require banks to apply payments to the balances with the highest interest rate first
Actually requires banks to apply only the amount which is in excess of the minimum payment to the highest interest rate balance, an important distinction that always seems to be missed in the news articles. Whatever the minimum payment amount is (2% or 5% or whatever) still gets applied wherever the bank chooses, which will usually be the lowest APR balance ...
+1. Agree with the comment, too.
@creditwherecreditisdue wrote:
@Anonymous wrote:
@DI wrote:The law does:
- Require banks to apply payments to the balances with the highest interest rate first
Actually requires banks to apply only the amount which is in excess of the minimum payment to the highest interest rate balance, an important distinction that always seems to be missed in the news articles. Whatever the minimum payment amount is (2% or 5% or whatever) still gets applied wherever the bank chooses, which will usually be the lowest APR balance ...
+1. Agree with the comment, too.
That particular part of the law is in regards to consumers who completes a BT, and make charges on the account after the BT. If a customer who has a card with a 0% APR on BT's and a 12.99% on purchases do a BT and make purchases, the law would force the bank to apply the payment to the purchase charges since it has the higher APR.
@DI wrote:
@creditwherecreditisdue wrote:
@Anonymous wrote:
@DI wrote:The law does:
- Require banks to apply payments to the balances with the highest interest rate first
Actually requires banks to apply only the amount which is in excess of the minimum payment to the highest interest rate balance, an important distinction that always seems to be missed in the news articles. Whatever the minimum payment amount is (2% or 5% or whatever) still gets applied wherever the bank chooses, which will usually be the lowest APR balance ...
+1. Agree with the comment, too.
That particular part of the law is in regards to consumers who completes a BT, and make charges on the account after the BT. If a customer who has a card with a 0% APR on BT's and a 12.99% on purchases do a BT and make purchases, the law would force the bank to apply the payment to the purchase charges since it has the higher APR.
Incorrect! Revike has it exactly right!
SEC. 104. APPLICATION OF CARD PAYMENTS.
Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is amended--
-‘Sec. 164. Prompt and fair crediting of payments
‘(a) In General- Payments’;
(2) by inserting ‘, by 5:00 p.m. on the date on which such payment is due,’ after ‘in readily identifiable form’;
‘(b) Application of Payments-
‘(1) IN GENERAL- Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.
‘(2) CLARIFICATION RELATING TO CERTAIN DEFERRED INTEREST ARRANGEMENTS- A creditor shall allocate the entire amount paid by the consumer in excess of the minimum payment amount to a balance on which interest is deferred during the last 2 billing cycles immediately preceding the expiration of the period during which interest is deferred.
‘(c) Changes by Card Issuer- If a card issuer makes a material change in the mailing address, office, or procedures for handling cardholder payments, and such change causes a material delay in the crediting of a cardholder payment made during the 60-day period following the date on which such change took effect, the card issuer may not impose any late fee or finance charge for a late payment on the credit card account to which such payment was credited.’.
SEC. 104. APPLICATION OF CARD PAYMENTS.
Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is amended--
(1) by striking the section heading and all that follows through ‘Payments’ and inserting the following:
-‘Sec. 164. Prompt and fair crediting of payments
‘(a) In General- Payments’;
(2) by inserting ‘, by 5:00 p.m. on the date on which such payment is due,’ after ‘in readily identifiable form’;
(3) by striking ‘manner, location, and time’ and inserting ‘manner, and location’; and
(4) by adding at the end the following:
‘(b) Application of Payments-
‘(1) IN GENERAL- Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.
‘(2) CLARIFICATION RELATING TO CERTAIN DEFERRED INTEREST ARRANGEMENTS- A creditor shall allocate the entire amount paid by the consumer in excess of the minimum payment amount to a balance on which interest is deferred during the last 2 billing cycles immediately preceding the expiration of the period during which interest is deferred.
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There is no other part of the bill that I can find which references changes in application of payments, and there is nothing that says the "in excess of minimum payment" clause only applies to unique combinations of BT and purchase balances. There is a virtually unlimited number of situations where a customer can have multiple APRs which apply to different sub-balances - a customer can have a promo purchase rate(s), a regular purchase rate, a promo BT rate(s), a regular BT rate, a cash advance rate, etc., all applying to portions of their overall balance. Section 164 (b) (1) certainly seems to apply in general to all payments made toward a multiple-APR balance ...
(Edit) Oops, too slow ...