President Obama Signs New Credit Card Bill Into Law

President Obama signed the U.S. Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 on Friday.

"Our business is changing," said Bank of America's Global Card Services President Ric Struthers,"It is changing partly because of the new law, but more importantly because customers are changing. They want rates and fess to be fair and to remain consistent. They want to be able to read and understand the terms and conditions of their credit card agreements. They want to be informed and know what it costs them to use a credit card. We completely agree."

Similar to regulations passed by the Federal reserve late last year, he new legislation restricts credit issuers; ability to price customers to reflect their individual risk, changes the way payments are applied to customer accounts and requires new disclosures. The majority of the provisions in the law became effective next February.

Some key provisions in the new law include:

- Prohibiting over limit fees unless the customer opts in to being allowed to go over the limit.

- Allocating payment amounts above the required minimum only to the highest rate balances first.

- Prohibiting rate increases on existing balances except in limited circumstances, including when cardholder payment is at least 60 days past due.

- Requiring statement disclosures that indicate how long it would take to pay off a balance if the customer only pays the minimum each month.

- Ensuring young people under 21 have a cosigner or are able to demonstrate financial ability to repay the loan before they are issued a credit card account.

"While there will be a significant impact to the card business," said Struthers, "ours goals remain the same: to responsibly lend to the broadcast number of customers possible, while protecting the safety and soundness of our company, and providing an appropriate return to our shareholders."

In the fourth quarter last year, Bank of America extended $8 billion of unsecured consumer credit and loan another $6 billion in the first quarter of this year.

"The payments business, including credit cards , is here to stay," Struthers said.

in 2008, U.S. cardholders charged more than $2 trillion in total volume, 14 percent of the U.S. gross domestic product.

"The credit card is embedded in our financial system," he concluded.

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