Credit Card Regulation–New Rules Effective Next Month

Although the Credit Card Accountability, Responsibility, and Disclosure Act (CARD) of 2009 was signed into law last May, its provisions were–controversially–scheduled to come into force in three stages. Some minor rules already apply and new regulations governing gift cards will not be enforceable until later this year.

But the most important clauses take effect on February 22. Here are 22 of the new credit card regulations that will apply from that date.

1. Rate Changes

• You must receive 45-days’ notice of credit card rates changing–except prime rate fluctuations on variable-rate cards
• Rates on existing balances can’t go up unless you’re 60 days or more late with payments
• If you pay at least the minimum balance punctually for six months after you were 60-days late, your rate must revert
• Only promotional introductory rates can go up during the first year after the account is opened
• Promotional, introductory rates must last at least six months

2. Lower fees

• Credit card companies can’t charge a fee for accepting your payment
• You can’t be charged over-limit fees unless you opt into your issuer’s over-limit scheme
• Penalty fees must be reasonable and proportional to the transgression

3. Payment Handling

• If you pay more than the minimum, the excess must be credited to the portion of the balance attracting the highest interest rate
• Credit card companies can’t impose early morning deadlines for receipt of payments
• Your payment must be received at most 21 days after your receipt of your credit card statement
• Payment due dates must be the same every month
• If you have a grace period, it must be at least 21 days
• Payments at local branches must be credited on the day they’re deposited
• You can’t be charged interest if you pay in full on time (bans so-called “double-cycle billing”)

4. Credit Card Terms, and Conditions Disclosure

• Your card issuer must tell you, on renewal, of any changes to your credit card terms and conditions
• The issuer must disclose how long it will take you–and how much it will cost you–to clear your balance if you make only minimum payments
• Your statement must make clear the payment due date and any penalties for lateness
• Changes to fees and finance charges (as well as rates) can only be made after you’ve received 45-days’ notice

5. Protections for Young Consumers

• Those under 21 years can only open an account if the credit card application is signed by a parent, guardian, or other adult who will be responsible for the debt–unless the young person has independent means
• There will be more strict controls over the marketing of cards to students
• Pre-screened offers to young people will also be limited

Published 01/07/10 (Modified 04/23/12)