Sunday, February 28, 2010

New Credit CARD Act In Force

It's official. The Credit Card Accountability Responsibility and Disclosure Act of 2009 is in law and fully required as of February 22, 2010.
What does this mean:

  • End Late Fee Traps: No more late fees if they receive it after 2pm; and due dates that change each month
  • Monthly bills must be mailed out at least 21 days before payment is due, and must have a consistent due date each month.
  • Each bill must have information about how long it will take you to pay off your balance if you only make minimum payments, and how much you would need each month to pay balance in 3 years.
  • Fair Interest Calculations: No more "double-cycle" billing, an unfair practice where issuers use the balance in previous month to calculate interest charges for the current month. The Minimum payment amount are applied to lowest interest balance. However, any payment you make over the minimum payment will finally be applied to the highest interest rate balance first.
  • Require Opt-In for going over-the-limit: Issuers need our permission to allow us to charge any amount and go over the limit and charge us an over-the-limit fee, if the issuer applies such fee. And, they can only apply the fee once per billing cycle. Finally, if I buy jewlery with credit card and it's over my limit, then it will get denied! (I will not opt-in.)
  • 45-Day Notice for Changes: Issuers must give us 45 days notice for any changes to the terms of our cards, including interest rate increases and changes to fees like annual or late fees. In addition, they must give us an option to cancel the card before such changes take effect if we don't like it.
  • Limits Fees on Gift and Stored Value Cards: Finally it requires better disclosure of fees for these cards, and restricts inactivity fees unless the card has been inactive for at least 12 months.
  • Annual and/or application fees cannot total more than 25% of the initial credit limit.
  • Clear disclosures for New Credit card applications: Finally, they clearly show the fees, interest rates, and terms in plain sight and not in tiny font.
  • Grace period on interest rate increases for new accounts: The 1st year after you open an account, issuer cannot generally increase your interest rate. After the 1st year, rate increases can apply only to new charges. (If you have a variable interest rate tied to an index, then it can vary based only on the index.) (If you are more than 60 days late paying your bill or if you signed up for a limited-time intro rate, then it can change.)
  • Disclose agreements between credit card issuers and universities: We get to see the agreements that the issuer makes with universities in respect to the marketing or distribution of credit cards to students.
  • If you are under the age of 21, then to open a credit account, you will now need either a co-signer or evidence that you have enough income to make monthly payments.
  • Credit card issuers cannot market their cards on college campuses, with promotions like get a free towel or shirt or chair or other marketing promotions.
Here's something exciting; for bank accounts with overdraft services:
-For existing bank accounts, if you do not opt-in, then beginning August 15, 2010, your bank's standard overdraft services won't apply to your everyday debit card and ATM transactions...they should be declined when you don't have enought money in your account and you will not be charged overdraft fees.
-If you open a new account on or after July 1, 2010, your bank cannot charge you overdraft fees for everyday debit card and ATM transactions unless you opt in.
-Unfortunately, checks and automatic bill payments are not covered. Therefore, banks may opt- you in automatically in their overdraft services for checks and auto bill payments; unless you request to be opt-out.

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