First Provisions of New Credit CARD Law Go Into Effect

8/25/09

While most provisions of the new Credit CARD Act don’t go into effect until next February, two provisions went into effect last week. The first change in effect is that credit card companies must notify customers 45 days before changing interest rates or other significant terms of an account. They also must make sure customers have 21 days between the time statements are sent out and when the payment is due, which is an increase of 7 days from previous rules.

Under the new provisions in effect, credit card statements will contain clear explanations of how long it will take to pay off a balance if you make only the minimum payment each month. Credit card companies will no longer be able to raise interest rates on existing balances if you’ve been paying on time, won’t be allowed to raise rates the first year an account is open unless the promotional rate was initially explained, and will have to review accounts every six months if they do hike rates, to reassess the increase and determine if it should be lowered. They will also no longer be allowed to charge fees for going over credit limits unless the consumer agrees to pay that fee, and must apply any amount of payment over the minimum to the highest interest rate balance first. Consumers facing rate hikes will have the right to cancel a card and pay it off over time at the lower rate if they choose to do so

In addition, there are new restrictions about granting credit to students. There are also parts of the new law that limit things like inactivity fees and expiration dates on prepaid cards and gift cards.

Source: http://www.huliq.com/7504/85169/credit-card-act-2009-phase-1-starts-today

Tags: Credit CARD Act