Credit Card Companies cutting limits and canceling Cards without warning....as New Credit Card Law approaches

The first wave of new credit card regulations under the CARD Act took effect recently, but consumers have been feeling the effects for months. Most card issuers made changes to customer accounts in advance of the new provisions, which, among other things, require lenders to give cardholders at least 45 days' notice of new terms and conditions. Many Americans saw their credit lines and interest rates change as lenders rebalanced their portfolios before the new laws phase in.

The spirit of the law intended to keep consumers informed about changes to their credit card accounts. However, some banks have interpreted these regulations to justify cutting loose loyal, creditworthy customers for the sake of arbitrary accounting efficiency. In a shocking trend, some lenders have started canceling cards completely, then mailing out closure notices. Some consumers have recently discovered this in the most shocking way possible: by being declined for transactions while swiping their cards!

Amazingly, this policy is completely acceptable under the CARD Act. "Account closure" is not the same as "account changes," meaning that banks are under no obligation to warn you that your card won't work anymore. The Wall Street Journal, The New York Times, and ABC News have all documented cases where otherwise loyal customers found themselves stuck at cash register, airports, or hotels with no method of payment. Unexpected account closure does much more than cause a scene at a retail store. It can cause a chain reaction of events, including