One major piece of
legislation President Obama signed last year was the Credit Card
Accountability, Responsibility and Disclosure (CARD) Act, which made
fundamental changes to credit card agreements. Some provisions were adopted
last summer, but the bulk of them took effect February 22, 2010.
Here\'s an overview of a few
Restrictions on interest
rate increases. The annual percentage rate (APR) for interest on new credit
card accounts cannot be increased during the first year unless:
A clearly disclosed introductory period
(teaser rate) ends; also, such introductory periods now must be at least six
It\'s a variable-rate (vs. fixed-rate)
card and the APR is tied to an index that increases (e.g., U.S. Treasuries);
You enter a debt repayment workout plan
and don\'t comply with its terms; or
You are over 60 days late making at least
the minimum monthly payment. Note: the new rules say the previous APR must be
restored after you\'ve made six months of on-time payments.
More advance notice. After
the first year, banks and credit unions that issue credit cards may raise the
APR on new transactions, or make other significant account changes, only after
providing 45 days\' advance notice. Also, you must be given an opportunity to
cancel the card before these changes take effect and pay off the balance at the
Interest rate review.
Every six months, card issuers must review accounts whose interest rates were
increased based on market conditions, cardholder creditworthiness or other
factors; and, if warranted they must reduce the rate or provide written notice
why the increase should still apply. (Effective August 22, 2010.)
Bill and payment timing.
Credit card statements must be mailed at least 21 days before the balance is
due. Also, payments must be credited as on-time if received by 5 p.m. on the
Order of balances paid.
When one card carries balances at different interest rates – such as one rate
for purchases and another for balance transfers – payments must be applied to
the highest-rate balance first.
Credit card statements must clearly post how much you\'ve paid in interest and
fees for the year, the upcoming due date and potential late fees, and how long
it would take to pay off your bill making minimum payments – including total interest
A few other highlights:
Over-the-limit fees cannot be charged
unless you have previously agreed (opted in) to allow charges over your credit
You cannot be charged additional fees for
paying your bill online or by phone.
Card issuers may no longer factor in
average daily balances from a previous billing cycle that wasn\'t fully paid off
when calculating current interest charges (known as \"double-cycle
People under 21 must have an adult
co-signer in order to open an account unless they can prove their ability to
repay their account balance.
To learn more about
particular changes to your credit card agreements, contact the bank or credit
union issuing your card, or visit www.fdic.gov. In addition, always read
mailings from issuers to ensure you\'re up-to-date on any account changes.