January 19, 2010
-
News: Review Credit CARD Act
The new Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 will soon take effect on February 22nd and some of you may be a bit confused about how it will affect you. Some of the provisions have received a great deal of media coverage and still others remain unnoticed. Here's a brief description of what to expect from the law:
• Credit card companies will be required to give consumers 45 days notice of any interest rate changes.
• Lenders are mandated to give credit cardholders at least 21 days from the billing date to the payment due date.
• Credit cardholders must be allowed to opt out of any fee and interest rate increases. If they do so, lenders have the authority to shut down the account but must allow the customer to continue paying the balance off as previously agreed. The lender does have the authority to set up a payment plan that allows the consumer to pay the debt off in five years.
• Lenders are prohibited from raising a customer in good standings interest rate with the exception of the expiration of an introductory or special offer rate or when prime increases on variable interest rate cards.
• Credit card companies will have the authority to raise interest rates on any account that is at least 60 days past due; however, the lender must review the account after six months. If the cardholder pays on time for six consecutive months, they must lower the interest rate back to the original number.
• Interest rate increases on fixed rate credit cards can only be placed on new purchases and not on previous transactions.
• Lenders must include in the card statement the projected amount of time it will take to pay the entire debt down if the customer only makes the minimum payment due.
• Credit card companies must obtain the cardholder's consent before authorizing over-the-limit transactions.
• Lenders can not charge more than 25 percent of the credit limit on subprime credit cards.