New credit card laws go into effect February 2010
Consumers need to be aware that elements of The Credit Card Accountability Responsibility and Disclosure Act of 2009 will go into effect this month. Known as the Credit Card Act of 2009, the new law will affect how some credit card transactions are handled at the point of sale.
Effective Feb. 22, consumers who have reached their credit card limits and attempt to pay for transactions will be declined at the point of sale. On July 1, consumers whose demand deposit account (DDA) balances won’t cover debit and check card use also will be declined.
Prior to the new law, some banks often extended “or floated” credit to many consumers who were accustomed to making purchases despite being close to their limits/balances. The new law brings this practice to an end. Declined sales can be prevented if 1) consumers request a higher line of credit prior to using their credit cards, or 2) enroll for overdraft protection when establishing their accounts.
Regrettably, many consumers will not understand why transactions are being declined, leading consumers to blame retailers or credit card processors. We encourage customers to make their complaints to those responsible – credit card issuers and banks.