On February 22, 2010, important legislation protecting the rights of credit card holders will go into effect. The legislation is known as the Credit Card Act of 2009; the full name is the “Credit Card Accountability Responsibility and Disclosure Act of 2009.”
The major provisions of the Credit Card Act are scheduled to begin on February 22, 2010.
Following are some but not all of the new rules:
Ban on fees for over-the-limit transactions unless consumer opts in.
Ban on “double-cycle billing.” This is the practice of applying interest charges to two full cycles of card balances, rather than just one. This effectively eliminates the grace period for a borrower who paid off a balance in the prior month.
No interest rate change during the first year after a credit card is issued.
Limit on rate increases for late payment. If you are 60 days late on a payment, your rate may be raised. But if you then pay on time for six months in a row, your rate must go back down to its original amount.
Ban on “universal default” – increasing your rate on one card because you missed a payment on another.
Ban on retroactive rate changes, and the requirement of a minimum 21-day grace period and 45-day notice of any rate changes.
Requires people under age 21 to have a parent or other adult over 21 cosign the credit card if the borrower can’t demonstrate an independent source of funds. (effective 2/22/10)
The Credit Card Act also restricts marketing to borrowers under 21, such as college campus promotions.
Requires mailing of statements 21 days before due date.
Limits on fees for “subprime” cards, also called “fee harvester” cards: fees must be charged and paid up front before the card can be used, and cannot be assessed as part of the credit extended on the account.
The legislation also contains a “reasonableness” limit on fees and charges—they must be proportional to the violation. If you see a charge on your account that seems too large, you may be able to contest it.
These new regulations are restricting many of the avenues credit card companies have followed to make money off their customers. It is certainly likely that they will be employing new strategies to increase their revenue, so consumers should be on the lookout!
Has your credit card company instituted a new practice you think is unfair? We’d like to hear about it! Complete our consumer intake form, or give us a call at (202) 822-5100.
