As of August 22nd all of the provisions of the new Credit Card Accountability, Responsibility and Disclosure Act are now in affect. There are a number of changes to the credit card industry that are positive for the consumers. We will begin to share this information with you to make sure you understand how these changes will affect you.
First, credit card companies can no longer raise your interest rates within the first year. However, there are a few exceptions that you should be aware of, such as rates can be raised after a 6 month promotional period or if you are late for more than 60 days. There must be notification in both cases and a cure period to resume initial rate after late payments if account is kept current for 6 month period.
Second, credit card companies can no longer penalize you on your payment history with other companies.
Third, all payments above the minimum payment due must be applied toward the balances with a higher interest rate.
Fourth, now requires a minimum of 21 day notice on due date for each billing cycle.
Fifth, credit card companies cannot charge an over limit fee or fee to make payment on account (unless using expedite service).
Sixth, credit card companies can no longer access additional fees (also called fee harvesting) for use of credit. Fees cannot be more than 25%. This happened with secured cards where they charged high fees to use the card and lowered the actual credit available.
Seventh, credit card companies can no longer offer credit to students under 21 years without co-signer of at least 25 years old or without viable proof of their ability to repay the debt.
Eighth, gift cards cannot expire prior to 5 years and there is no inactivity fee with first year.
This is just a recap of the laws, but remember that there is still no cap on interest rates and we can expect the credit card companies to find other ways to make up the billions of dollars lost with these new laws!
Stay tuned…
