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What you Need to Know About the Credit Card Act

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The Credit Card Act Goes Into Effect

The Credit Cardholders Bill of Rights, aka the Credit Card Act, aka the Credit Card Accountability Responsibility & Disclosure Act of 2009, aka House of Representatives Bill 627, aka the Credit Card Reform Act has gone into effect this week.

Whatever you want to call it, the White House referred to it as the Credit Card Accountability, Responsibility and Disclosure Act, so I guess we’ll go with that one from now on. The multiple names were confusing enough, so I’ll try to cut through the fluff and give you a basic rundown of the major changes that will go into effect.

Credit Card Interest Rates

  • Interest rates can’t be raised during the first year of an account (with a few exceptions, including teaser rates).
  • Customers must be over 60 days late on payments before their interest rate can be raised on balances. If the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
  • If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first.

Credit Card Feescredit card act

  • Bills can be paid online, through mail, or over the phone without incurring a processing fee – unless expedited service is requested.
  • Over limit fees can’t be charged unless cardholders are notified that the purchase will put them over their limit and they authorize it to go through anyway.

Card availability to Minors/Under 21

  • Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own.
  • Creditors are prohibited from providing credit to consumers under age 18. (unless they are emancipated under state law, or the consumer’s parent or legal guardian is designated as the primary account holder).

Gift Cards Changes

  • Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card.

Receipt of Credit Card Statement

  • Credit card statements must be mailed out at least 21 days before they’re due.

Disclosures on Account Changes

  • Creditors are required to post their written credit card agreements online.
  • Creditors need to provide a 30-day advance notice of an account closure.
  • Cardholders must get at least 45 days notice of any change in terms.

What Does the Credit Card Act Mean for you?

  • Which of these changes will have the biggest impact on you?
  • Have you been burned in the past by any of the credit card business practices that will now be prevented by the Act?

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  • Allison says:

    Thanks for the useful rundown! Right before the CARD Act went into effect, we did an article on what to do before the credit card act went into effect, so it’s very useful to line this up to see what to do now that it has. Interesting to line them up next to each other. Thanks!

  • Joe says:

    Definitely the interest rate getting jacked up for late payments. It really stinks the most when your payment is only a few days late and your interest rate gets bumped up permanently. I’m glad they’ve changed that.

  • Shaun says:

    If you pay late you should pay the interest! It’s like the analogy going to parking fines, if you park in the wrong spot and you get a ticket, live with it.

  • Jessica says:

    Not that it affects me now, but I’m grateful that policies regarding Card availability to Minors/Under 21 have been put in place. I think I would have been in a different place than where I’m at now if that was around 5 years ago. I like the changes..Hoorah!

  • SImon says:

    @Jessica – Agreed, good to have the policy for Under 21’s.

  • Daddy Paul says:

    Which of these changes will have the biggest impact on you?
    Less rewards. The credit card companies are cutting back.

  • Ray says:

    The current state of the economy seems to be directly connected to what the major banks and brokerages have engaged in the past few years. Sadly, there are many victims out there the new law is not really helping.
    The amount of personal debt is crushing the recovery. Unemployment will be a thorn in our side for a while.

    My own finances suck do to unemployment issues.

    I am finally employed again. My financial issues are directly related to this credit card thing. When it come to deciding whether to eat or not…. the credit card comes out. Somewhere along the line the CC companies came up with “universal default”. Just a fancy way to say they can do what they want anytime they want. So a guy like me, barely scraping by, gets hit across the board with interest increases to 30+ percent because I was late on ONE payment. Universal default allowed the CC companies to ALL raise my rates even if I was not late to ALL of them.

    So now I am working. But was stuck with those interest rates.

    I have to say there are many scams out there. Settlement companies are all over TV with claims of reducing what my balances if I will just pay them 1000.00 or so up front… On a credit card of course. What a joke, then I find out they are just sticking my payments in their pocket till I am so late my credit will be destroyed. Then if I actually get to “settle” I will owe taxes on the amount I was “forgiven”. HELLO!! I don’t have the money, how one earth am I going to pay the IRS… You just destroyed my credit, I can’t pay taxes with a credit card now…

    Fortunately, I did not attempt a settlement. That is just way to scary.

    I did hook up with these guys at Accelerated. A written guarantee, A+ BBB rating etc. Good folks.

    And they don’t beat you up on the phone. Hard to believe, but they are legit.
    Here is a link


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