Credit card holders can circle February 22 on their calendar as the day when new consumer protections laid out in the Credit Card Accountability Responsibility and Disclosure Act of 2009 kick in.
Following are just a few of the new credit card regulations and consumer protections as a result of the Credit CARD Act:
More Notice for New Interest Rate Changes. Card issuers must give card holders 45-days advance notice in the event of an interest rate change. Additionally, promotional rates must apply for at least six months and, unless disclosed up front, card holders cannot have their rate increased in the first year.
Cardholder Opt-Out. If there are significant changes made to the terms of the account, card holders can choose to reject those changes and will have five years to pay off the balance under the original terms.
Older Age Restrictions Added. Card issuers are no longer allowed to issue a credit card to anyone under 21 unless they can prove they have the means to repay debt or if an adult over 21 co-signs on the account. Credit card companies also face new restrictions on how they can promote cards to college students and can no longer offer free gifts as enticements on campuses.
New Rules for Monthly Statements. In response to complaints that bill due dates were being moved up—and leading to increased late fees—monthly statements must now be mailed or delivered 21 days prior to the due date. Additionally, card issuers can no longer set a payment deadline before 5 p.m. and cannot charge card holders if they pay online, over the phone or by mail—unless the payment is made over the phone either on the due date or the previous day.
Overpayments Go Toward Highest Interest Balances. If the card holder has varied interest rates for different services or accounts, any overpayments must be applied to the account that is incurring the highest interest rate.
Over the Limit Opt-In. Card holders must opt-in to be able to exceed their credit limit—and subsequently be charged an over-limit fee by the issuer. If a card holder chooses not to opt-in, then he or she will not be able to exceed their credit limit and incur any resultant fees.
Increased Disclosure on Minimum Payments. Card issuers must disclose how long it will take the card holder to pay off their bill if they only pay the minimum monthly payment as well as how much the card hold would need to pay every month to pay off the balance in 36 months.
Say Goodbye to Double-Billing Cycles. When calculating finance charges, card issuers can no longer employ two-cycle or double billing—a method that causes cardholders to pay interest on previously paid balances.
To learn more about the new consumer protections, Creditcards.com has a comprehensive breakdown of the Credit CARD Act of 2009.