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What the New Credit Card Rules Mean for You

The Credit Card Accountability, Responsibility and Disclosure (CARD) Act was signed into law by President Obama in 2009 and has been fully in effect since August 2010. The CARD Act has changed the way credit card issuers market, bill and advertise their credit cards, which is taking away from their revenue.  This change has benefited cardholders in many ways but also could eventually mean the return of annual fees, fewer rewards cards and payments due upon bill receipt with no more grace periods. Here are the important changes you should know about:

Clear Due Dates & Times
Card issuers can no longer set early morning deadlines for payments, leading to fewer late penalties. Bills must be sent 21 days prior to payment due date. Payments must also be on the same day every month.

Limits on Over-Limit Fees
Consumers now must “opt-in” to permit the ability to charge over their credit limit. If a cardholder does charge more then their limit, their over-limit fee cannot exceed the amount overspent. If a consumer chooses not to opt in, if a transaction exceeds their credit limit, it will be rejected.

Late Fee Cap
Late fees can no longer be anymore then $25 for an occasional late payment.  However, if a cardholder is late more then once in a six-month period, their fee can be increased.

Interest Rates

  • If an account has more than one balance, any payment in excess of the minimum payment must be applied to the balance that has the highest rate of interest.
  • A cardholder must be delinquent on the account for at least 60 days before the card issuer can raise the interest rate due to a late payment.
  • Interest can be charged only on balances in the current billing cycle.
  • Introductory teaser interest rates must remain in effect for at least six months.
  • Monthly billing statements now contain a chart showing how long it will take, and the total cost to pay off the existing balance making only required minimum payments.
  • Card issuers must give cardholders 45 days notice (up from 15 days notice) before making a “significant change” in the terms of an account.
  • Cardholders now have the right to avoid an interest rate or fee increase by canceling the card within those 45 days.

To read more about these changes, visit the official page.

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