New Credit Card Law

On August 20th, 2009, many provisions of the new credit card law took effect to help you, the consumer, better understand the workings of your credit card. The new law contains the biggest changes the credit card industry has seen in decades. Below are several highlights from the new law that may be important to you.

Limited interest rate hikes:

Interest rate hikes have become more controlled and will only be allowed under certain circumstances (such as the end of a promotional rate). Due to this change, credit card companies must give at least 45 days’ advance notice before changing the rate on your card. Universal default (raising your interest rate based on your payment record with other forms of unrelated credit such as a utility company) will also end.

More time to make your payment:

You will now be given a “reasonable amount of time” to make your monthly payments. This means that your payment will be due at least 21 days after your bill is mailed. Credit card companies will no longer be able to set early morning or unreasonable deadlines for payments. Deadlines before 5pm on the payment due date will be illegal. Also, payments that are due on a weekend, holiday or any day the company is closed for business will not be subject to a late fee.

Limits on over-limit fees:

You as the consumer have the right to decide if you want to pay over-limit fees or not. This does not mean you can argue over the charge. What it does mean is that you will be given the option of receiving over-limit fees and allowing yourself to purchase something that exceeds your credit card limit. If you choose not to receive these fees, any transactions exceeding your credit limit will be denied.

Minimum Payments:

Credit card companies are now required to let you know the consequences of making only the minimum payment each month. They will have to tell you how long it will take to pay off the entire balance if you only make that minimum payment. They must also tell you how much you will have to pay each month to pay off your credit card in 12, 24 or 36 months, including interest. Remember, the more you charge, the more you have to pay off in the end!

These are just a few of the highlights to the new law. To read the law in its entirety, click on the following link:
http://www.creditcards.com/credit-card-news/assets/credit-card-act.pdf