How the new credit card regulations affect you
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) went into effect on February 22, 2010. The CARD Act was passed in order to give consumers additional protections against predatory creditors.
Credit card regulationsIncluded in the legislation are many additional requirements of creditors, including that they:
* Advise consumers on how long it will take to pay off their outstanding balance by making only the minimum monthly payment.
* List monthly payment amounts needed in order to pay off the balance within a three-year period.
* Advise their clients on where they can get help if they find themselves in a debt dilemma by listing toll-free credit counseling hotlines from accredited agencies.
* Supply consumers with a 45-day advance notice on interest rate changes, changes to the terms of a credit account, and fee changes (like annual fees, cash advance fees, and late fees).
* Must allow consumers to cancel the card before any changes of terms on a credit account (like fees) take place. (Keep in mind the creditor may close your account and increase your monthly payment amount if you choose to cancel the card due to the changes. They may also issue you a certain time frame to pay off the debt.)
* Cannot increase your interest rate for the first 12 months after you open a new account. (Following the 12-month period, rate increases can only be made to new charges.)
* Cannot charge over-the-limit fees to consumers who want to place a restriction on going over their credit limit. (Consumers must opt-in to over-the-limit fees if they want their creditors to allow them to go over their credit limit. Creditors may charge you for going over the limit once per billing cycle. Consumers can cancel this at any time.)
* Cannot charge more than 25% of the original credit limit in fees (such as annual fees or application fees).
* Cannot grant credit to those under 21 without proof of income or a cosigner. (If you are granted a credit account and are under 21, you must have a cosigner for any requests in credit limit increases.)
* Must mail statements to consumers at least 21 days prior to the payment due date.
* Must apply any excess payment amounts, funds over the minimum monthly payment, to the highest interest balance first.
* Cannot double bill. (All interest charges must be applied to balances in the current billing cycle.)
These new rules are meant to help consumers better understand and manage their credit. However, consumers must pay attention to their credit card statements and take advantage of the information provided.