Both consumers and credit card customers scratched their heads over the timing of the Credit Card Reform Act – it doesn’t kick in until February 2010. Why the delay? Nobody seems to know for sure. Now, Congress is revisiting the issue – and is exploring the notion of triggering the new law in December.

Congress passed the Credit Card Reform Act in the spring, and President Obama was quick to sign it into law. But one big loophole in the bill gave card companies almost a full year to veer a new, more favorable course on late fees and credit limits – card features that were targeted by lawmakers when the bill was finalized. In essence, the card industry had ample time to readjust due date cycles, hike interest rates and penalize cardholders even more onerously on late payment billings before the February 2010 deadline.

The Washington-based Center for Responsible Lending, says that even in the face of legislative and regulatory change, top credit card issuers have chosen to increase fees and raise rates for more customers, including those in good standing.

To cut into the time credit card companies are using to cash in on the old, pre-reform rules, U.S. Representatives Carolyn Maloney and Barney Frank intend to speed things up by changing the trigger date to Dec. 1 from the current Feb. 22, 2010 timetable.
"Since the signing of my bill by the President on May 22, too many credit card companies have used the period to raise rates and fees in a way that would be banned come February," Maloney said in a statement prior to the release. "I believe they're taking advantage and using the time before the effective date badly. Changing the effective date to December 1st is both warranted and wise."

The consumer advocacy group CRL agrees, citing some sleight of hand moves by card issuers to take advantage of the current nine-month window between approval and enactment of the new reform legislation.

"Hard-working Americans who use credit cards to help pay bills, buy groceries and make ends meet need relief sooner rather than later from the industry's destructive tricks and traps, especially during hard times like these.,” said the group in a statement on Sept. 24. “We commend Chairwoman Maloney and Chairman Frank for proposing that the consumer protections in the recently passed Credit CARD Act be fully implemented December 1, 2009, almost three months earlier than called for by the law."

Another reason why Congress wants to push to date up is because of the holiday shopping season. While holiday shopping forecasts are not exactly robust for 2009 - Deloitte's Retail Group expects a zero-percent change in 2009 holiday sales compared with 2008, total sales should exceed $810 billion. With that much dough on the line, lawmakers want to add an extra layer of protection on beleaguered consumers this year.

On the downside for consumers, a Dec. 1 kickoff date for credit card reform could mean tighter credit for the holidays. In addition, expect card companies to really push rate hikes and restrictive credit limits into overdrive with a shorter time frame.

Key Changes in Credit Card Reform Act

  • No more universal default (meaning card issuers can’t raise interest rates due to late payments on other bills or your credit score takes a hit).
  • Card customers will get their bills earlier - 25 days before the due date. That’s up from a minimum 14 days.
  • Card companies can’t arbitrarily change terms and conditions on consumers. If a card issuer hikes interest rates, card holders reserve the right to cancel the card and pay it down on the existing interest rate.
  • Card companies now have to give card holders 45-days notice to raise interest rates – and card holders get three billing cycles to decide whether to opt out or not.

—For a comprehensive credit report, visit the Credit Center.