{"id":171,"date":"2010-02-03T16:56:51","date_gmt":"2010-02-03T20:56:51","guid":{"rendered":"http:\/\/butterflyfe.com\/articles\/2010\/02\/03\/the-new-credit-card-laws-you\/"},"modified":"2017-10-27T14:54:58","modified_gmt":"2017-10-27T14:54:58","slug":"the-new-credit-card-laws-you","status":"publish","type":"post","link":"https:\/\/butterflyfe.com\/articles\/es\/2010\/02\/03\/the-new-credit-card-laws-you\/","title":{"rendered":"The New Credit Card Laws &#038; You"},"content":{"rendered":"<p>On May 22, 2009, President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act (\u00abCredit CARD Act\u00bb).\u00a0 What does this new law mean for consumers?\u00a0 The Credit CARD Act aims to prohibit some of the lender practices that trap consumers in a vicious cycle of debt and give\u00a0 better information to card users.\u00a0 The Act does <span style=\"text-decoration: underline;\">not<\/span> place a limit on interest rates that lenders may charge.<\/p>\n<p>While the spirit of the law is to help consumers, like any new law, there may be some loopholes or unintended consequences.\u00a0 Predictably, criticism of the law is split between the financial services industry and consumer groups.\u00a0 The creditors say the new law will force them to increase fees in other areas and deny credit to many people at a time when they need it most.\u00a0 Consumer groups say the law is a beginning but that it doesn&#8217;t go far enough.\u00a0 Because most of the provisions of the Credit CARD Act begin on February 22, 2010, many accounts were subject to big rate increases or other anti-consumer changes\u00a0before this date.<\/p>\n<p>Highlights of the Credit CARD Act&#8217;s specific provisions are as follows.\u00a0 All provisions are effective on 2\/22\/2010 unless otherwise noted.<\/p>\n<h2>Payment Protections<\/h2>\n<ul>\n<li><span style=\"text-decoration: underline;\">Payments applied to highest interest charges first<\/span>!\u00a0 This will be a great help to many consumers with balances at different interest rates.\u00a0 The new law requires that payment amounts over the minimum go toward the highest-interest portion of the balance first.\u00a0 Currently payments are applied to the lowest interest rate debt first, and the highest interest rate last; A practice that&#8217;s good for lenders but bad for borrowers.<\/li>\n<li><span style=\"text-decoration: underline;\">21 days to pay<\/span>.\u00a0 The creditor must mail the statement 21 days before the due date, not 14 as some now do, sometimes with little or no notice.\u00a0 <span style=\"text-decoration: underline;\">Note<\/span>: This provision went into effect on 8\/20\/2009.<\/li>\n<li><span style=\"text-decoration: underline;\">No funny business on payment due dates<\/span>.\u00a0 No late fees may be charged for payments received by 5 pm on the due date or the next business day if the due date falls on a holiday or weekend.\u00a0 This will prohibit the practice of some creditors that impose arbitrary early-morning time requirements on the due date.<\/li>\n<\/ul>\n<h2>Interest Rate and Fee Protections<\/h2>\n<ul>\n<li><span style=\"text-decoration: underline;\">Limits on Penalties and Penalty Interest Rates<\/span>.\u00a0 Currently, late payments can trigger a \u00abpenalty\u00bb rate of interest to apply retroactively to the balance owed.\u00a0 Under the new law, no penalty rate may be imposed on an existing balance unless the payment is 60 days late.\u00a0\u00a0 Even then, if payments are on time for the next 6 months, the old interest rate must be restored.<\/li>\n<li><span style=\"text-decoration: underline;\">The first year, interest rates are locked in<\/span>.\u00a0 No interest rate increases will be allowed during the first year of a credit card contract unless you fall under the 60 days late penalty provision (see above) or the rate is a special introductory rate (see below).<\/li>\n<li><span style=\"text-decoration: underline;\">Specials can&#8217;t immediately disappear<\/span>.\u00a0 Special \u00abintroductory rates\u00bb must be for at least 6 months.<\/li>\n<li><span style=\"text-decoration: underline;\">No more universal default provisions<\/span>.\u00a0 A universal default is when a credit card contract counts <span style=\"text-decoration: underline;\">any<\/span> late payment, or \u00abdefault,\u00bb against the consumer.\u00a0 This means that a late payment with completely unrelated creditors (like utility bills) can be used to increase the interest rate on the consumer&#8217;s credit card. These provisions are now commonplace.<\/li>\n<li><span style=\"text-decoration: underline;\">If the credit card rate does go up, there&#8217;s a pay-off option<\/span>.\u00a0 If interest rates are increased for legitimate reasons, the credit card company must send a notice.\u00a0 The notice will set out the consumer&#8217;s right to cancel the card and pay off the remaining balance under the <span style=\"text-decoration: underline;\">existing<\/span> interest rates and terms, over a reasonable period of time.\u00a0 <span style=\"text-decoration: underline;\">Note<\/span>: This provision became effective on 8\/22\/2009.<\/li>\n<li><span style=\"text-decoration: underline;\">No more \u00abdouble cycle billing<\/span>.\u00bb\u00a0 Double cycle billing only affects consumers who carry a balance from month to month.\u00a0 The term refers to the fact that creditors can use both the current month and the previous month to compute the average daily balance, the figure on which interest is computed.\u00a0 This computation means that a prior month&#8217;s higher balance can allow a higher interest charge for the next month&#8217;s lower balance.<\/li>\n<li><span style=\"text-decoration: underline;\">Limits on \u00abover limit\u00bb fees<\/span>.\u00a0 Under the new law, credit issuers cannot charge an \u00abover limit\u00bb fee unless the consumer first consents to such charges.\u00a0\u00a0 If the consumer does not consent to over limit fees, any purchase over the consumer&#8217;s limit will simply be declined.<\/li>\n<li><span style=\"text-decoration: underline;\">No late fees that aren&#8217;t the consumers&#8217; fault<\/span>.\u00a0 Creditors cannot charge a late fee due to their own delay in crediting payments.\u00a0 Any late fees that are charged must be \u00abreasonable.\u00bb<\/li>\n<li><span style=\"text-decoration: underline;\">No fees for telephone or electronic payments<\/span>.\u00a0 Creditors cannot charge fees to consumers for making payments via mail, telephone or electronically unless live help is required.<\/li>\n<\/ul>\n<h2>Knowledge Can Give You Power<\/h2>\n<ul>\n<li><span style=\"text-decoration: underline;\">45-day notice of increases<\/span>.\u00a0 Under the new law, there must be at least 45 days advance notice of any increases in interest rate, fees or penalties.\u00a0 <span style=\"text-decoration: underline;\">Note<\/span>: this provision became effective on 8\/20\/2009.<\/li>\n<li><span style=\"text-decoration: underline;\">Now we\u2019ll really know<\/span>.\u00a0 Credit card statements will be required to list how long it will take to pay off the balance at the minimum payment and how much it would take to eliminate the balance in one year, two years and so on.\u00a0 Issuers will also be required to post contract terms on line for easy consumer access.<\/li>\n<\/ul>\n<h2>Other Provisions<\/h2>\n<ul>\n<li><span style=\"text-decoration: underline;\">Are you 21<\/span>?\u00a0\u00a0 Card issuers will be prohibited from giving a credit card to any one under 21 unless they have a co-signer or the minor can prove his or her ability to pay.<\/li>\n<li><span style=\"text-decoration: underline;\">Leave those students alone<\/span>.\u00a0 The new law restricts aggressive marketing to college students.\u00a0 Students are now graduating with an average of over $4,000 in credit card debt.<\/li>\n<li><span style=\"text-decoration: underline;\">Gift card rules<\/span>.\u00a0 Gift cards will not be allowed to expire for at least 5 years and declining values and hidden fees will be prohibited.<\/li>\n<li><span style=\"text-decoration: underline;\">Investigation of intercharge fees<\/span>.\u00a0 Another way that card issuers make money is to charge retailers, restaurants and other merchants a fee for each charge a customer makes with that business.\u00a0 These are called intercharge fees and they run 1 to 2% of the purchase amount.\u00a0 These fees are ultimately passed to the consumer.\u00a0 Studying these fees may lead to further changes that will benefit consumers and merchants alike<\/li>\n<\/ul>\n<h2>So What&#8217;s the Downside?<\/h2>\n<p>Card issuers have taken advantage of the months prior to the February 22, 2010 effective date on most of the protections of the new law by raising rates and fees. It is also likely that credit card issuers will find ways to replace the income they will lose from the Act&#8217;s restrictions on fees and rates.\u00a0 For example, annual fees may increase, rewards programs may disappear, and new fees may arise for items not covered by the Credit CARD Act. Zero percent interest is likely a thing of the past and card issuers will be more cautious about giving credit to those with poor credit histories.\u00a0 On the other hand, since Americans have long had too much credit, it may be a good thing to have a little less credit and a greater understanding of the price we pay for credit.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On May 22, 2009, President Obama signed the Credit Card  Accountability, Responsibility, and Disclosure Act (\u00abCredit CARD  Act\u00bb).\u00a0 What does this new law mean  for consumers?\u00a0 The Credit CARD Act aims to prohibit some of the lender practices that trap<\/p>\n","protected":false},"author":2,"featured_media":2307,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[29,33],"class_list":["post-171","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-credit-and-loans","tag-credit-cards-consumer-loans","tag-dealing-with-debt"],"_links":{"self":[{"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/posts\/171","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/comments?post=171"}],"version-history":[{"count":6,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/posts\/171\/revisions"}],"predecessor-version":[{"id":2293,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/posts\/171\/revisions\/2293"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/media\/2307"}],"wp:attachment":[{"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/media?parent=171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/categories?post=171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/butterflyfe.com\/articles\/es\/wp-json\/wp\/v2\/tags?post=171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}