The new “Credit Card Accountability, Responsibility and Disclosure Act of 2009” (CARD), which is designed to protect consumers from unfair credit practices, generally took effect on February 22, 2010. Here’s a summary of several key provisions.
* Introductory rates offered by credit card companies must remain in effect for at least one year (six months for promotional offers). Consumers must receive at least 45 days’ notice (instead of the current 15 days) before a rate hike. (This provision became effective August 20, 2009.)
* Companies will be required to mail credit card statements at least 21 days before the due date (seven days longer than before).
* Issuers can’t raise rates on an existing balance unless you’re late by 60 days or more.
* Credit card payments will be applied to debt with the highest interest first.
* Double-billing cycles, the practice of basing finance charges on both the current and previous balance, are banned.
* To reduce “over-the-limit” fees, companies must obtain a cardholder’s permission to process transactions above their personal limit.
* Consumers must be notified how long it will take and how much it will cost to eliminate debt through minimum monthly payments.
* Applicants under age 21 won’t qualify for a credit card without showing an ability to pay or a co-signer.
* Statements must prominently display fees paid to-date as well as explanations for those fees.