Changes to credit card rules you need to know

Congressman Joe Courtney met with seniors in Lebanon to celebrate the 75th anniversary of Social Security on Aug. 14, 2010. He says seniors are often the hardest hit by credit card policies. Courtesy photo.

From Congressman Joe Courtney:

Earlier this week, provisions designed to protect credit card holders went into effect across the country as part of the Credit Card Accountability Responsibility and Disclosure or CARD Act.

I fought for the CARD Act because it addresses many of the deceptive and frustrating practices used by credit card companies – many of which I have heard about directly from constituents.

Some changes have already gone into effect as of earlier this year, but as of August 22, 2010 credit card companies must adhere to the following consumer-friendly rules, as well:

Reasonable penalty fees

Previously: A late payment fee may have been as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.

Now: Your credit card company cannot charge you a fee higher than $25 unless: (1) One of your last six payments was [also] late, in which case the fee may be up to $35; or (2) Your credit card company can justify a higher fee by showing that it incurs costs as a result of late payments.

Also, your credit card company cannot charge a late payment fee greater than your minimum payment.

Therefore, if you have a minimum payment of $20, your late payment fee can’t be more than $20.

Similarly, if you exceed your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.

Re-evaluation of recent rate increases

Previously: Your credit card company could increase your card’s APR with no obligation to re-evaluate the rate increase.

Now: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days of completing the evaluation.

Additional fee protections

No inactivity fees. Your credit card company cannot charge you inactivity fees for not using your card.

One-fee limit

Your credit card company cannot charge you more than one fee for a single event or transaction that violates your agreement as a cardholder. For example, you cannot be charged more than one fee for a single late payment.

As I mentioned, these are the last of several rules implemented as part of the CARD Act. A list of the protections that went into effect earlier this year can be found at this link to the Board of Governors of the Federal Reserve System Web site:

http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm

As always, I look forward to hearing from you about this or any other information.

Please feel free to contact me at http://courtney.house.gov/email to share your thoughts or concerns.

Editor’s note:

Some of the changes affecting bank practices when it comes to credit cards that went into effect in February 2010 are especially important. Among them:

• If your credit card company does raise your interest rate after the first year, the new rate will apply only to new charges you make. If you have a balance, your old interest rate will apply to that balance.

• If your payment due date is on a weekend or holiday (when the company does not process payments), you will have until the following business day to pay. (For example, if the due date is Sunday the 15th, your payment will be on time if it is received by Monday the 16th before 5 p.m.).

• If you opt-in to allowing transactions that take you over your credit limit, your credit card company can impose only one fee per billing cycle. You can revoke your opt-in at any time. [Talk to your bank representative about how to sign up to allow transactions over the limit; most banks are assuming you don't want this option if you do NOT contact them.]

Information about more changes is available at the link included in Congressman Courtney’s letter, above.

Posted Aug. 24, 2010