Even though the new credit card rules were signed into law on May 22nd, it doesn't mean that the change comes overnight.
As you may or may not know, the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act was signed into law this past May by the federal government. I have done some research and thought I would share what I have found.
In general, it adds more protections for consumers, particularly from increases in interest rates if you pay on time and it will give consumers more time to pay on their bills. It will also mean fewer penalty fees, late charges, and interest payments.
Even though the new credit card rules were signed into law on May 22nd, it doesn’t mean that the change comes overnight. The earliest of the consumer protection will start on August 20th, when the mandatory 45 day advance notice of changes in credit card terms goes into effect. The rest of the consumer protections such as limiting interest rate hikes won’t start until February 22, 2010. The law will change the way credit card issuers market, bill, and advertise credit cards.
Due to the economy, credit card companies have been lowering credit card limits and other companies have closed some consumer’s accounts. Here are some of the highlights of the new law:
-Credit card companies will have to apply any payment over the minimum amount to the balances with the highest interest rates.
-Payments will not be considered late if they are received by 5:00pm. If the due date is on a weekend or holiday, payments received on the next day are considered on time.
-Credit card companies must give 21 days from the date of mailing for the payment to be due. The due date must be the same every month as well.
-Credit card companies cannot increase interest rates on balances that already exist unless they are over 60 days late. If the rate is increased, it will apply only to new purchases.
-Credit card companies cannot charge you interest on balances that have already been paid off.
-The consequences of paying the minimum balance must be disclosed. Consumers must be told how long it will take to pay off the card and how much interest they will pay if they only pay the minimum payment.
-If you are near to your credit limit and make a purchase that will put you over your limit, your card will be declined if you have not opted-in for over-the-limit fees.
-Consumers with bad credit cannot be charged upfront fees that exceed 25 percent of the available credit limit in the first year of the card.
Hopefully, this new law will benefit all consumers and save us all some money. When times get tight, or in case of emergency, it is helpful to have a credit card to use, but it only provides a temporary fix if it ends up costing us more money in the long run.
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As of today, credit card issuers must give 45 days notice before increasing your annual percentage rate (APR) or changing any significant terms of the credit agreement. Also, issuers must mail statements to you at least 21 days before the payment is due.
Be sure to read any letters that your credit card company sends as some of them have been making big changes in anticipation of the law. Some of the changes include increasing fees, reducing credit limits, and dropping customers with high balances.
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