The second part of the new credit card laws went into effect on February 22; these changes are part of the Credit Card Accountability, Responsibility and Disclosure Act of 2009.wrote about last August. Here are some highlights of the new changes:
1. Credit card companies cannot increase the interest rate or fees (APR) on your existing balance for one year after the account is opened.
2. As exceptions to the first rule, the card issuer can increase the APR for an existing balance if:
(A) they disclose such an increase when the account was opened;
(B) you are using a variable-rate card, and the published index has increased;
(C) you have completed a pre-arranged “workout” plan, such as a debt-reduction agreement; or
(D) you are delinquent on a payment by 60 days or more.
3. Once your credit card account has been open for more than a year, the company can raise your interest rate. The new rate can only be applied to new purchase made after the first year. Additionally, this kind of rate increase must be disclosed to you at the time you open your account.
4. If you have a card with multiple interest rates, any amount you pay above the minimum payment must be applied to the balance with the highest interest rate first.
5. Double-cycle billing is now prohibited. This is when they assign interest rate charges for the current balance as well as the average daily balance from the last billing period.
6. Credit card statements will be easier to read and will include a box that shows how much you have paid in interest and fees during the year. The statement must also show the consequences of making only minimum payments each month. The monthly payment required to pay off the existing balance within 3 years, including interest, should be reported on your statement as well. Finally, your statement shall show the due date for the next payment, as well as any fees that might be imposed for late payments.
7. The due date for your payments must be on the same day each month and will not be considered late until after 5pm on the due date.
8. Purchases can no longer exceed your credit limit unless you “opt-in” for such an arrangement. Otherwise, these transactions will be denied at the register.
9. Co-signers and proof of income are now required for consumers under the age of 21.
The final phase of changes will take place on August 22, 2010. According to news reports that I have read, the credit card companies stand to lose over $12 million a year because of these changes and they will be looking for any way they can to make up what they have lost. Be sure you are aware of what your credit can cost you.