What the Credit Card Act Means to You

The Credit Card Act has changed the way that banks and credit card companies do business. There are a number of ways that the Credit Card Act can affect you. Here are a few things to consider about what this legislation means to you. 

Notification Requirements

One of the big ways that this legislation affects you is in the area of notification requirements. Companies are now required to notify you further in advance of certain things that can affect you. According to the rules, they have to let you know at least 45 days in advance before making any changes to the terms of your agreement with them. For example, if they are going to change the interest rate on your credit card or change late fees, they have to notify you in writing 45 days in advance. You also have to have your credit card bill mailed to you 21 days before it is due. With the bill, the credit card company also has to provide you with information about how long it is going to take you to pay off your credit card bill if you make only the minimum payment every month. They also have to tell you how much you would have to pay in order to pay off your bill within three years.

Grace Period

According to the new rules, there also has to be a grace period on interest rate increases. In the past, credit card companies could increase your interest rate on a whim. Now, they have to wait a certain amount of time before they can increase your rates. In most cases, they are going to avoid increasing your interest rate during the first year of service with them. After that, they are going to be able to increase the interest rates only on new purchases. The purchases that you made during the first year are not going to be included in this rate increase. Under this ruling, the credit card companies also have to apply any extra payments to the highest balances on the card. They also cannot raise your rates for being late on your payments until you have gone past 60 days late. 

Fees

The new rules also have changed what types of fees can be charged by your credit card company. In the past, it was very common to be charged a fee for going over your credit limit. However, under the new rules, these fees are being phased out. With the new rules, you have to specifically opt into allowing transactions to be processed that would take you over your limit. If you do not opt into this, the credit card company has to decline the transaction. This means that these fees are going to be very rare in the future. 

Other fees such as application fees and annual fees cannot total in excess of 25 percent of the initial credit limit. A credit card company also cannot charge a fee for accepting a payment in any form. For example, if your credit card company used to charge a fee for taking phone payments, they can no longer do so under the rules.

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