New Credit Card Law – The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act that President Obama signed into law gives consumers added protections from certain credit-card practices. Here are some of the key changes that may affect you.
The Credit Cardholders’ Bill of Rights includes several provisions aimed at limiting how credit card companies can charge consumers. But does not include price controls, rate caps, or fee setting. This bill went into effect on February 22, 2010, nine months after it was enacted.
The following are some of the important changes in the new credit card law and how they may affect you.
New Credit Card Law
The end of confusing billing practices – Credit card payments will be due at the same time each month. With notification of the bill made at least 21 days in advance of its due date. Payments will be applied to highest interest-rate balances first so that customers can pay off their balances faster and more cheaply. Credit card companies will be obligated to use plain language on all materials. They must display on statements how long it would take consumers to pay off their existing balance. And interest charges if they paid only the minimum due.
Interest-rate reform – Nearly all interest rate increases on outstanding balances will be prohibited. Card companies must notify the consumer 45 days in advance of an interest-rate increase. Additionally, there cannot be any interest rate increases for the first year any account is open.
Opting-in for overdraft and overlimit protections – Customers will now have to opt-in to an overdraft program instead of being automatically enrolled. This means that if cardholders try to make a purchase that exceeds their limit. Or if they overdraw a debit account, their card will simply be declined. Under the old rules, the transaction could go through and the consumer would be fined.
Protections for young consumers – Credit card companies face greater restrictions on marketing cards to college students.
Because of the new credit card law, those under 21 will have to prove that they have the means to pay off their card limits. Or have a cosigner before they can be granted a card. We recommend that you get an updated copy of your credit report file. That way you may stay on top of any changes a creditor may have added.