Today is the day credit cards change ways they do business. Most of the rules in the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 are going into effect today.
Here is a rundown of what changes are taking effect (for more details see my article The Credit Card Accountability, Responsibility, And Disclosure (CARD) Act Of 2009- Effect On Credit Card Holders:
Better Disclosure of Credit Card Terms
- Card issuers must display how long it will take to pay off a balance if only the minimum is paid and how much interest will be paid;
- Full disclosure of payment due dates and late fees on your billing statement; and
- Card issuers cannot use the term “fixed rate” unless the interest rate will not vary over the published period.
Fair Payment Applications and Times
- Issuers cannot set early due date deadlines in the day (e.g. They can’t make the payment due at 9 am);
- Due dates will be set to the same date each month; and
- When paying more than the minimum balance the difference will be applied to the highest interest balance.
- Card companies must consider a consumer’s ability to actually pay off the cards when granting or increasing credit.
Restriction of Certain Fees and Interest
- Issuers cannot charge a fee for payments via mail, telephone, or electronic transfer unless the payment is expedited though a live service (i.e. when you call up to arrange a rush payment);
- Over-the-limit fees cannot be charged unless the consumer has allowed their card to have over-the limit charges; and
- No interest charges to debt paid in time, otherwise known as double-cycle billing.
Unfair Interest Rate Increases and Term Changes
- Promotional rates will generally last at least six months; and
- Card issuers cannot raise APR, finance charges, or fees in the first year an account is opened and limits the ability of issuers to use “universal default” repricing.
Oversight of Industry
- The Federal Trade Commission will set rules to limit deceptive marketing by credit card companies; and
- Credit card companies must post their card agreements online and provide the agreements to the Federal Reserve Board to post on their site.
Protecting Young Consumers (under 21)
- Consumers under 21 must have the signature of an adult over 21 who will take responsibility for the consumer’s debt or provide proof that the consumer has the means to pay off any credit card debt;
- No credit limits unless both the consumer and the co-signing adult agree; and
- Increased protections from credit card companies enticing young consumers to sign up for credit cards and transparency showing agreements between credit card companies and universities.
Already Enacted Changes (August 20th, 2009)
- Credit card companies must notify consumers 45 day before any interest card rate changes or significant changes to their card terms; and
- Credit card statements must be mailed 21 days before the due date rather than the industry norm on 14 days.
Will these changes help you or affect the way you use a credit card? Let me know in the comments!
Resources used for this article:
Fact Sheet: Reforms to Protect American Credit Card Holders | The White House
FDIC: FDIC Consumer News Summer 2009
Office of Thrift Supervision – CEO Ltr 308 – Credit CARD Act of 2009: Effective Dates