August 04, 2010
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Managing Under New Credit Card Rules, Pt.3
Greater manageability for cardholders.Cardholders will have an easier time understanding the terms and conditions of their credit card contract. The CARD Act requires that lenders write terms and conditions in plain language that they are easily understood and visible to cardholders. With the plain language in plain sight provision, lenders are required to provide consumers clear disclosures of credit card account terms and conditions prior to opening an account. Credit card account statements must also include all activities and disclosures must be provided on any potential fees that the cardholder may be subject to in the future.
Lenders are now required to list on the monthly credit card statement the precise fees the cardholder has paid during the current month and access to the total year to date fees. All fees must be clearly explained. Disclosure templates must be updated on a regular basis to assure they remain congruent with the changing market and empirical research results. The law requires that the financial industry conduct ongoing testing of all credit card terms and conditions to ensure cardholders understand and find them to be useful and relevant. Cardholders will pleased to learn that new terms cap late fees and prohibits lenders from charging more than $25 for a late payment and stipulates that late fees cannot exceed the minimum payment due.
The law requires that lenders provide cardholders with real information on the financial consequences of their decisions. This means that credit card companies must provide details to the consumer regarding the consequences of their credit decisions and the amount they choose to apply to their remaining balance. Therefore, lenders are required to indicate on the statement the length of time it will take to pay off the existing account balance if the cardholder continues to pay the minimum payment due. Lenders must also include the total cost of interest if the consumer chooses to continue paying the minimum payment with no additional amount applied toward the balance. The monthly card statement must also display the required payment amount and total interest cost if the consumer would like to pay the account balance off in 36 months.