How Will the New Credit Card Rules Affect You?

How Will the New Credit Card Rules Affect You?

The Credit Card Act of 2009 (HR 627) was signed into law by President Obama and went into effect today, February 22, 2010.

What does this mean for credit card holders?  Here is my rendition of the bill, you will need to read the bill for yourself to get all the terms and conditions.

It means you will have protection from arbitrary interest rate increases.

Card companies must give you 45 days notice of any interest rate increases.

You have the right to cancel your card and pay off your existing balance at the existing interest rate and repayment schedule if you get hit with an interest rate hike; you will have 3 billing cycles after the rate increase to say no to the new terms.

Card companies can't retroactively increase interest rates on your existing balance if you are in good standing.

Card companies won't arbitrarily be able to change the terms of their contract with you.

It will take me how long to pay that balance???

Creditors must print on their statements how long it would take to pay off the debt and how much you would pay in interest combined if the you make the minimum payment only.

Requires creditors to print on their statements the payment you would need to make to pay off the debt in three years, how much you would pay in interest combined and the difference than if you were to pay only the minimum payment.

It will allow you the opportunity to pay on time without penalty.

Card companies will be prohibited from charging interest on debt that is paid on time during a grace period.

If you had been subject to a rate increase and then paid on time for six consecutive months, you must have your interest rate returned to the rate it was before the rate increase. This also requires creditors to review your payment history every six months to check and see if a rate decrease should come your way!

You will have no more due date "trickery."

This gives you time to pay your bills by requiring card companies to mail your billing statements 21 calendar days before the due date (previously 14 days).

Payments that are made before 5 p.m. EST on the due date are considered to be on-time.

The due date must fall on the same day each month. If the fixed due date falls on a Saturday, Sunday or legal banking holiday, then the due date will be the next business day after the due date. This will also prohibit due dates to fall on a weekend or holiday.

You will actually be able to get a hold of someone, possibly!  Card companies are to provide a phone and Internet address on each statement.

You will have protection from misleading terms and conditions.

Card companies won't be able to use terms such as "fixed rate" and "prime rate" in a misleading or deceptive way.

Your creditors will now have a minimum size font on their statements to improve make the terms easy to read and understand. No more hiding the "tricks."

If you were pre-approved for a card, you will have the opportunity to reject that card up until the moment they activate it without having your credit negatively impacted.

You will not have any more "over the limit" fees.

Credit card companies must offer you the option of having a fixed credit limit that cannot be exceeded. This will prevent card companies from charging over-the-limit fees on you if you have a fixed credit limit.

My favorite!  Companies must fairly allocate your payments.

Requires card payments to be applied to your debt with the highest interest rate first. Most card companies use your payments to pay off a lowest interest rate balances first!

Hopefully these new credit card rules will help you the consumers!