Details of the New Credit Card Bill of Rights

The credit cardholders bill of rights will go into effect in July of 2010, creating new and important rights for credit users. The Credit Cardholder’s Bill of Rights Act is designed to help people that commonly fall prey to what President Obama calls “the fine print that hides the truth.” The new bill does many things to help credit card users, changing and improving the way the industry lends money and extends credit to consumers. This bill will help to eliminate unfair practices and make credit cards more convenient and easy to understand. This article will give you all the details of the new credit card bill, going over all the changes to credit card accounts that will go into effect in 2010.

Finance Charges & Interest Rates

Many changes will be done to the way interest rates and finance charges work in regards to credit cards. Credit card issuers will no longer be able to charge two billing cycle finance charges, which previously allowed them to charge cardholders interest on balances they had already paid off. Companies will no longer be allowed to increase the interest rate on balances that are already in existence. Previously, credit card companies were within their rights to raise interest rates however the wanted but the bill limits them, meaning that interest rate increases will only apply to new balances and purchases. Existing balances will remain at the old interest rate. In addition, no interest rate increases will be legal during the first year of a new account, unless the increase was disclosed at the opening of the account. Also, the current 15-day advance notice that’s required for increases to the interest rate will be raised to 45 days. Even increases due to failure to pay the minimum payment will be subject to the new 45 day notice. A very important new change also means that your credit card issuer can’t leave your rate at the default interest rate if you’ve shown improvement in your credit use. Rates that have been increased must be reviewed often and periodically and must be lowered if any changes are evident. This is one of the most important new changes for credit cardholders, allowing thousands of Americans that had a period of irresponsibility or financial trouble recover from their situation.

Payments

Many changes have also been made to the payment system for credit card balances. Once the bill takes effect, any payments that are made higher than the minimum due will be applied to the balance with the highest interest rate. Also, no fees can legally be charged for any payments made over the phone, online or by mail, unless the payment is last minute. Payments must also be due each month on the same date, improving the ability to predict and know when your bill is due.

Over-the-Limit Fees

Changes have also been made to the system of over-the-limit fees. When the bill takes effect, credit card companies can no longer charge you a fee when you go over the limit unless you ask them to allow the processing of over-the-limit transactions. Any transactions that will put you over your limit will be declined and not incur any fee. In addition, only one such fee will be allowed total per billing cycle, per transaction. Even if your balance remains over your limit during more than one billing cycle it will still only be subject to one fee. Also, no over-the-limit fees will be charged to you for any holds placed on your credit limit.

Statements & Processing of Payments

Once the bill takes effect, billing statements must be sent 21 days before your due date to give you enough time to pay your bill. This will help consumers avoid late fees and interest rate penalties. Any payments received by 5:00 PM on the due date will be considered on time. Payments will also be on time if they’re received on the next business day after a weekend or holiday. Also, any payments made to a local brance will be consider as received on the same day. Another important change is new accounts that aren’t used or activated, or closed within 45 days, must be removed from the consumer’s credit report.

Resources

Irby, LaToya. “The Credit Cardholder’s Bill of Rights Act of 2009.” About.com. 24 May 2009. https://credit.about.com/od/consumercreditlaws/a/creditbillright.htm