New Credit Card Rules

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The new credit card rules will be going into affect on February 22, 2009. What does this mean for you?

Interest Rates

No increase in interest rates for the first 12 months.
This means that interest rates must continue for at least 12 months except for the follow conditions.

• Promotional and introductory rates that expire
• Variable interest rate credit cards
• You finished or canceled a hardship program
• You were late more than 60 days.

If your credit card company has increased your interest rate, your account must reviewed every six months to determine if the rate can be lowered. If the factors that caused the increase in interest rate changed, the interest rate must be reduced.

Limits On Over-the-Limit Fees
The fee for going over your credit limit can only be accessed once in a billing cycle. If you make a payment and your balance goes below the credit limit and then a charge comes threw that puts your balance over the limit again within one credit cycle, you can only be charged ones.

You can only be charged an over limit fee for three consecutive billing cycles unless you pay down your balance below the credit limit during a credit cycle.

Credit Card Fees

Payments Must Be Processed on the Day They're Received
If a credit card company receives a payment 5:00 p.m. on the due date it will be considered on time. If your due date falls on a holiday, weekend, or any other day that does not accept payment, your payment due date will be the following business day. If your lender accepts payments at a local branch, your payment must be process the date is received at the branch.

Above-Minimum Payments Should Be Allocated Fairly
Payments made over the minimum payment required will be applied to the highest interest rate balance first, followed by the next highest interest rate. The expedition to this rule is if you have a deferred interest, the entire payment will go toward that balance in the last two billing cycles of the promotion.

No Late Fee For Card Issuer Changes
You can not be charged a late fee if your payment was not processed because your credit card issuer made a change to its mailing address or payment processing procedures. This applies to payments received for up to 60 days after these changes became effective.

No Fee For Method of Payment
Credit card issuers can not charge a fee based on your payment method unless you have requested an expedited payment that must be handed by a customer service representative.

You Must Be Given Time to Pay Your Bill

You must be mailed your statement 21 days before your statement due date. You can not be charged a late fee if you do not receive your bill within 21 days before your payment is due. 

You Must Have Time to Pay Within the Grace Period

You also have 21 days to pay off your credit card balance if you have a grace period to void any finance charges.

Limits on Initial Fees for Subprime Credit Cards

During its first year, any fees charged on a subprime credit card account can not exceed 25% of your credit limit. For example, if you have a credit card with a $1,000 credit limit, your total fees can not exceed $250, with the exception of late, over limit and returned check fees. 

Advance Notice of Interest Rate and Other Significant Changes

Back on August 20, 2009, credit companies must send written notice of interest rate increase or other significant credit card changes 45 days before the effective date. This includes increases in any fees or finance charges. Credit cardholders must be notified of their right to reject, or opt-out of, the changes.

No Penalty for Opting-Out

If you decide to opt-out of the credit card changes and close your credit card account, your card issuer can't charge extra fees because you closed your account, default your account, or require you to pay the balance in full immediately. The credit card company can double your monthly payment requiring you to repay your balance within five years, or they can leave your repayment plan the same.

No Advance Notice of Minimum Payment Increases

While the change may seem significant to cardholders, the Federal law does not require credit card issuers to send advance notice of minimum payment increases.

Universal Default is Banned

The new credit card act bans the use of Universal Default. Credit card companies have been using this clause to increase your interest rates if you happen to be late on a card issued by another company. They can no longer do this.

Double Billing Cycle Finance Charges Are Banned

The card act also  bands the "double billing cycle method" of calculating finance charges. Credit Companies are no longer allowed to charge finance fees on balances from a previous billing cycle. They also cannot charge interest on balances that have already been paid. The only expedition to this rule is when there has been a billing error or a billing error dispute or returned check. 

Billing statements must detail cost of making the minimum payment.

Credit card companies are now required to show you how many months it will take to pay off your credit card if you continue to make only the minimum  payments. They must also list the interest you will end up paying. 

by Daron Vchulek - 2/18/2010

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