New Consumer Credit Card Laws &
How They May Affect You!
The Credit Card Accountability, Responsibility and Disclosure Act of 2009, has some regulations that went into effect February 22, 2010. Here are some of the Consumer “WINS” for consumers!
- Fee Restrictions: Starting on October 22, 2010 unless you give the credit card company permission they can’t charge you “over the limit fees” and if they do, they cannot exceed $25 (if you are chronically late, $35). (This is a 50-80 billion dollar lose to the banks – ouch!)
They also cannot charge you for making a payment over the phone or internet (unless YOU want the payment expedited).
Limits fees on “subprime” cards, so always make sure you read all the terms and conditions. (Less than 4% of consumers read terms and conditions.) - Bans Double-Cycle Billing: Some credit card companies were billing for current and previous balances. That’s pretty sad – good riddance I say!
- Credit Card Companies now have a Mandatory 21-day Grace Period: Statements must be sent 21 days before they are due – used to be 14 days. If you were late you probably paid the high daily interest rates! This took effect Aug 2009. So make sure you pay by due day!
- Gift Card: Your gift card won’t expire for 5 years, so if you got one for Christmas or your Birthday and you stuck it in a drawer, it still might be good. Also card issuers cannot charge inactivity fees unless the card has not been used for 12 months.
- Student Credit Cards: If you are under 21 you will have to provide a co-signer or be able to prove financial independence. If not, you will be unable to get a credit card.
- Your Payments will be applied to the Balance with the Highest Interest Rate first: I like that!
- You get a 45-day Notice of Interest Rate Hikes (used to be 15 days): Any changes to terms and conditions must give a 45 day notice and if you don’t like the new terms you can “opt out”. Beware if you Opt Out, they may be able to charge you 2-5%, up your rate to 29% and close your account!
- Retroactive Rate Increases – you will have to read your card’s terms and conditions but basically rates can’t be raised until after the first year of issuance and if offered a promotional rate, it’s good for 6 months. I want to add that there are a few exceptions to the rule, so read the fine print – did I mention that already?
Results of the new law? Since the banks are losing big bucks with the new guidelines, the average rate on new cards is 14.4% plus higher fees! (Hey, they have to make it up somewhere, right?) Watch for them to raise rates in other areas. And of course the worse your credit score is the higher your rates and fees.
For a FREE Report on how to obtain a copy of your credit report and monitor your credit for FREE email us at . Jim Hogle – “the credit expert”