New Credit Card Rules

Key provisions of the new federal credit card law have gone into effect as of February 22, 2010 and promise new protections for consumers. Here are some of the major elements of the Credit Card Accountability and Disclosure Act of 2009, better known as the CCARD Act.

What is new? 

Rate Increases: Credit card providers cannot increase interest rates within the first twelve months after a consumer opens an account. (There are some exceptions to this.) Rate increases will only apply to new purchases going forward. No increase can be applied to existing balances unless the account becomes sixty days delinquent.

Delinquent Accounts: Once an account becomes sixty days delinquent, a higher penalty interest rate goes into effect on the existing balance. The account will be returned to the original rate after 6 months of on-time payments.

No More Universal Default: Until this new law, many credit card providers could increase a customer's interest rate if the consumer was delinquent on another company's account. The new rule prohibits this practice.

Over-the-Limit Purchases and Fees: The new rules require consumers to give approval or "opt-in" to going over their credit limit. If you choose not to give approval, this will stop automatic over-the-limit fees from being applied, but it will also mean that purchases that bring the account over the established limit will be turned down at the point of sale. If you allow over-the-limit purchases and exceed your limit, your credit card company can impose only one fee per billing cycle.

Young Adult Credit Card Users: Credit card providers cannot issue credit cards to consumers under twenty-one years of age unless the consumer can show proof of sufficient income or has a co-signer such as a parent, guardian or spouse.

Additional Information on Statements: Credit card statements must now include information on how long it will take to pay off the current balance paying only the minimum payment.

 

For More Information:

It's important to become familiar with the new rules and how they will apply to your own accounts.  Click here to download more information from the Federal Reserve on the new credit card rules.

 

What Else Can Consumers Do?

  • Stay informed. Read all mail that comes from your credit card companies.

  • Get organized. Keep a file on changes to your accounts as you receive notice.

  • Keep on top of things. Review your statement each month to become familiar with any new format and information.

  • Be a smart consumer. If you are unhappy with changes that were made to your account prior to the new rules, call the customer service department to discuss what can be done. You can also shop around for a better fit. Investigate local banks and credit unions that may offer more favorable rates, fees and account benefits.

  • Keep all of your options open. Focus on maintaining a good credit score by paying your bills on time each month and keeping your credit balances below 30% of your credit limit.