The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, designed to provide new credit card protections to consumers, will go into effect on Feb. 22, 2010.
New rules regarding disclosure:
• Creditors must send a notice 45 days before making significant changes to the terms on a consumer's card, including increasing interest rates and changing certain fees. When making changes to the terms, they must give you the option to cancel the card.
• They must also disclose the time period and total interest it will take to pay off the credit card balance if only minimum payments are made.
New rules regarding rates, fees and limits:
• Creditors may only increase a consumer's rate in the first 12 months if the consumer is 60 days late paying their bill or an introductory rate has ended.
• A consumer's interest rate may be raised after the first 12 months, but the new rate only applies to new charges.
• Over-the-limit fees may only be charged if you opt-in for over-the-limit transactions.
• Application fees and annual fees cannot total more than 25 percent of the initial credit limit.
• Without a cosigner, consumers under 21 can only sign up for a credit card if they can show they are able to make payments.
New rules regarding billing and payments:
• Creditors must send credit card bills at least 21 days before payment is due, and the due date must be the same date every month, no earlier than 5 p.m.
• A consumer's payment is applied to the highest interest balances first.
• Interest charges can only be imposed on balances in the current billing cycle.
For more information on the Credit CARD Act, visit www.federalreserve.gov/consumerinfo.
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