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Six Ways the New Credit Card Law Affects You

Written by: Vincent A. Gorski

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Posted about 2 years ago. 0 helpful votes, 0 comments

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You Will Have More Time to Pay Monthly Bills

Today: Some credit card companies send monthly statements less than 21 days before your payments is due. Frequently, these companies charge a late fee and/or increase your annual percentage rates if the payment is received just one day late. Under the Credit CARD Act: Card companies are required to mail monthly statements at least 21 days before the payment is due.

You Will Have the Same Payment Due Date Each Month

Today: Your payment due date can change each month. Under the Credit CARD Act: The payment due date of each statement must be the same day each month.

Your Statement Will Include More Information about Minimum Payments

Today: Credit card statements display the required minimum monthly payment but do not tell you how long it will take to pay off your balance if you pay only the minimum payment. Under the Credit CARD Act: Credit card statements must state how long it will take to pay off the balance if only minimum monthly payments are made.

You Will Have Greater Protections to Prevent Exceeding Your Credit Limit

Today: Some credit card issuers charge an over-the-limit fee each time you exceed your credit limit. Under the Credit CARD Act: Before the card issuer can charge an over-the-limit fee, you will need to "opt-in" (give your card company permission) to complete transactions that will exceed your credit limit. If you "opt-in", you can still be charged for exceeding your limit. If you do not "opt-in" and you make a charge that puts you over your limit, the card company may or may not decline the transaction. However, either way, the card company cannot charge you an over-the-limit fee if you don't sign up.

You Will Have More Favorable Terms to Pay Off Higher Interst Rate Balances

Today: For accounts with different interest rates tiers (e.g., one interest rate for cash advances and balance transfers and another interest rate for purchases), most credit card companies first apply your payments to balances with the lowest interest rates. Under the Credit CARD Act: Payments in excess of the minimum amount must be applied to your balances with the highest interest rates first.

Your Credit Card Issuer will be Prohibited From Increasing the Interest Rates on Existing Balances

Today: Even when you've made all monthly payments on the account on time, some credit card companies may increase interest rates on existing balances due to a change in your credit score, income or other factors. Under the Credit CARD Act: In general, card issuers cannot increase rates on existing balances but will be allowed to increase rates for future purchases after the first year. A penalty rate cannot go into effect unless you don't make a required payment within 60 days of its due date. In that case, the issuer must give you a 45-day notice that tells you why your rate was increased. Thereafter, the penalty rate must be decreased to the original rate after six consecutive months of timely payments.