Credit Card Reform: What It Means For You
Credit Card Reform: What It Means For You
• Protections Against Rate Increases
• Streamlined Billing Practices
• Fee Restrictions
• Improved Disclosures
• Protections for Young Adults
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) became law on May 22, 2009. This important law empowers you as a consumer with more choices and better information. Continue reading to find out more.
More information on the CARD Act can be found at
www.CardPolicyInfo.com
You Are Protected Against Interest Rate Increases
• The CARD Act prohibits interest rate increases during the first year, and promotional rates must last at least six months;
• The CARD Act prohibits interest rate increases on outstanding balances and bans “universal default” and “double-cycle billing” (Exceptions apply for accounts where payment is more than 60 days past due, the card carries a variable interest rate tied to a public index, an introductory or promotional rate expires, or the customer fails to comply with a workout agreement.); and
• After the first year of a new account, interest rates may be increased for future transactions. But you must first be given 45-days advance notice about the rate increase and the new rate cannot go into effect until 14 days after notice of the change is sent to you.
• The Federal Reserve requires credit card issuers to reconsider any interest rate increase on an account since January, 2009.
Billing Practices are Streamlined
• The CARD Act requires payments above the minimum amount due to be applied to your balance with the highest interest rate first. This helps you pay off your balances quicker and saves you money;
• The CARD Act requires payment due dates to be the same every month, minimizing confusion about when a payment must be received and helping you avoid any late fees; and
• The CARD Act requires bills to be mailed to you at least three weeks before payment is due.
Certain Fees are Restricted
• The CARD Act prohibits over-the-limit fees unless you expressly authorize such fees in advance;
• The CARD Act generally prohibits charging fees that relate to the manner in which you make payments on your credit card bill. For example, you can’t be charged a fee for paying the bill by phone instead of by sending a check (an exception applies in cases where a request for expedited payment is received);
• Most late payment fees cannot exceed $25 and no fee can exceed the dollar amount of the infraction;
• Card issuers can no longer charge inactivity fees for customers who have a credit card but are not making purchases; and
• The CARD Act dramatically limits upfront fees on subprime cards.
Disclosures are Vastly Improved
• The CARD Act requires card companies to disclose certain important information in table format with every billing statement. This includes the payment due date, the ending balance, the minimum payment due, how much a late payment fee would be, a warning about late payments and a warning that paying only the minimum will ultimately cost more;
• The CARD Act also requires companies to disclose how long it would take you to pay the entire balance off if you only make monthly minimum payments, and a separate disclosure must detail how much you must pay each month in order to pay your balance in full within 36 months; and
• The CARD Act also requires card agreements to be posted on the Internet.
• As of July 1, customers have benefitted from new standardized disclosures required by the Federal Reserve that simplify credit card account agreements and applications, billing statements, and change in term notices.
Young Adults Are Protected
• The CARD Act requires young consumers under the age of 21 to obtain a co-signer on a credit card application or to provide proof that the applicant can make the payments.