Credit card users received a host of new protections recently thanks to the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act). The CARD Act, passed into law in 2009, adds some significant changes to how credit cards are used and how credit card companies can act.
Anyone who owns and uses a credit card should be aware of what this law includes.
Today, Februrary 22, 2010, the second round of changes specified by the CARD Act go into effect. The first round of changes went into effect on August 20, 2009.
Now that the CARD Act is indeed in full effect, let's take a look and decipher what some of the most notable changes may be.
Many of the most important benefits of the CARD Act come in the form of various rules and regulations pertaining to the following five aspects of credit card use:
1. Rate increases
The CARD Act places new limits on how a credit card company can increase your interest rates.
Unless a card was issued with a temporary promotional rate, or a variable rate, the card issuer can't increase your interest rate unless you've been delinquent in paying for more than 60 days. However, this restriction only applies to the first year, so keep an eye out once the year passes.
In addition, if a credit card issuer offers and introductory or promotional interest rate for a new card holder, that intro period now must last a minimum of 6 months.
2. Student credit cards
Card issues now cannot give credit cards to people under the age of 21 unless they can prove an income and/or get a cosigner over the age of 21. Card offers can no longer be mailed to people of student age, either.
3. Payment time
Card issuers must now give consumers at least 21 days to pay their monthly credit card bill. Some issuers used to give card holders just 14 days to pay their monthly bill.
In addition, issuers must set the payment due dates on the same day every month and payments received by the credit card company 5 p.m. must be credited to the card holder's account the same day.
4. Notice of changes
If a credit card company makes changes to a credit card agreement, they must now notify the card holder in writing. In addtion, the changes specified can only take effect once 45 days have passed after notification.
This applies to any changes to a credit card account, not only interest rate changes.
5. Overlimit fees
Consumers now have the right to opt-in for over-limit fees. These fees are charged once a card holder exceeds the credit limit of the card. If the card holder doesn't opt-in, they won't be allowed to spend over the limit of the card.
If they do opt-in, the credit card issuer has the right to charge the person a fee if they do end up going over their credit card's limit.
How does the CARD Act affect you?
One thing that is certain about the CARD Act is that it is forcing change in the industry. But how do these rules affect you and your credit card use? Or do they affect you at all?
The answers to those question will vary from person to person, but if you do find yourself receiving bad news as a result of the changes - if your credit card company starts adding fees, increasing your interest rates or lowering your credit limit, for example - remember that you do have options. Compare credit cards and see if any new offers meet your needs. Decide whether it's time to move on or look another direction.
