New Credit Card Rules Eff ective Aug. 22 : Credit Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act).
New credit card protections must reduce your rate within 45 days after completing the evaluation.
This set of rules is the latest in a series of regulations that implement the Credit
Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act).
New Credit Card Rules Eff ective Aug. 22
More new rules from the Federal Reserve mean more new credit card protections
for you. Here are some key changes you should expect from your credit card
company beginning on August 22, 2010
Reasonable penalty fees
Let’s say you are late making your minimum payment.
Today: Your late payment fee may be as high as $39, and you likely pay
the same fee whether you are late with a $20 minimum payment or a
$100 minimum payment.
Under the new rules: Your credit card company cannot charge you a fee
of more than $25 unless:
one of your last six payments was late, in which case your fee may
be up to $35; or
your credit card company can show that the costs it incurs as a
result of late payments justify a higher fee.
In addition, your credit card company cannot charge a late payment fee that is
greater than your minimum payment. So, if your minimum payment is $20, your
late payment fee can’t be more than $20. Similarly, if you exceed your credit limit
by $5, you can’t be charged an over-the-limit fee of more than $5.
Additional fee protections
No inactivity fees. Your credit card company can’t charge you inactivity
fees, such as fees for not using your card.
One-fee limit. Your credit card company can’t charge you more than one
fee for a single event or transaction that violates your cardholder agreement.
For example, you cannot be charged more than one fee for a single
late payment.
Explanation of rate increase
If your credit card company increases your card’s annual percentage rate
(APR), it must tell you why.
Re-evaluation of recent rate increases
Today: Your credit card company can increase your card’s APR with no
obligation to re-evaluate your rate increase.
Under the new rules: If your credit card company increases your APR, it
must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.
This set of rules is the latest in a series of regulations that implement the Credit
Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act).
Useful terms…
annual percentage rate (APR)
For credit cards, the APR is the cost of credit expressed as a yearly interest rate. Each billing period (usually about a month), the company charges a fraction of the annual rate, called the periodic rate.
penalty fees
Fees charged if you violate the terms of your cardholder agreement or other requirements related to your account. For example, your credit card company may charge a penalty fee if you make a late payment or if you exceed your credit limit.
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