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 Fees

• 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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