A new credit card law has been created to outrule the old credit card act. Yesterday, Feb. 22, 2010, the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) takes effect. It puts forth new rules for credit-card issuers that are arguably the most consumer-protective in the history of credit cards.
For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs. But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable.
On Finance Charges, Interest-Rate Hikes and Notifications, the new credit card rules states that:
• No rate increases for the first 12 months after opening a credit card account.
• Credit card rate increases can only be applied to new charges.
• Annual and application fees on credit cards cannot exceed 25% of your initial credit line.
• No more double-cycle credit card billing.
• A six-month minimum promotional-rate period.
• No more credit card over-limit fees, unless the card holder opts in.
• No fees to make credit-card payments online or over the phone, unless you make a payment on your due date.
• Must give 45-day notice of pending rate or fee hikes or any other significant changes to credit-card terms.
On Credit Card Billing Statements, Payments and Disclosures, the new credit card rules states that:
• Credit card billing statements must be sent 21 days before the due date.
• Credit card due date should be the same date each month.
• Credit card payments are considered on time when received by 5 p.m. on the due date or the next business day after a holiday or weekend.
• Credit cards payments above the minimum must be applied to the highest-rate balance first.
• Each monthly credit card statement must include information on how long it would take you to pay off your balance if you make minimum payments only and the total you’ll pay, including interest and principal; and how much you needto pay each month in order to pay off your balance in 36 months and the total you’ll pay, including interest and principal.
• Credit card statements must also include a warning that by making only minimum payments you will pay more interest and it will take you longerto pay off your debt, as well as a toll-free number to call if you want to be referred to a credit-counseling service.
On College Students and Young Adults, the new credit card rules states that:
• No credit cards for college students unless co-signed by a parent or they can demonstrate “ability to pay.”
• No credit-limit increases if you are under 21 and have a co-signer without that co-signer’s permission.
• No credit-card marketing and freebies on college campuses.
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