information on the Credit CARD Act of 2009 provisions effective February 22, 201

Please read this important information on the Credit CARD Act of 2009 provisions effective February 22, 2010.

The Credit CARD Act of 2009 made significant changes to credit card practices. The law ensures that the credit card industry does not subject card holders to predatory practices. It also ensures that users have clearer information about their credit cards. AFI grantees should understand the highlighted changes brought about by the law so they can instruct participants about possible impacts on their credit card usage.

Provisions of the Act fall into the following general categories:

* Consumer Protection
* Protection of Young Consumers
* Miscellaneous Provisions
* Enhanced Consumer Disclosures

Some of the major provisions of the Act that go into effect on February 22, 2010 include the following:

* The law prohibits credit card companies from using double cycle billing. That billing method uses the average daily balance of current and previous billing cycles, which produces high finance charges.
* The law prohibits credit card companies from changing cards’ interest rates during the initial 12 months after the cards are opened; however, companies may change interest rates if they inform users when cards are first opened.
* The law prohibits credit card companies from increasing interest rates on preexisting balances. If a company increases the rate, the new rate will apply only to new amounts charged on a credit card. The balance prior to the rate increase will continue to accrue finance charges at the old rate.
* If a person does not make a payment within 60 days of the due date, then the credit card company may apply a penalty rate increase, although later timely payments necessitate a return to the previous (lower) rate.
* Promotional APRs (annual percentage rates) must be at least 6 months long unless the Federal Reserve identifies exceptions.
* Credit card companies may not apply over-the-limit fees (charges for carrying balances above credit limits) unless customers have “opted-in” to allow banks to process transactions that would take them over their credit limits. A company may apply only one over-the-limit fee during a billing cycle.
* Credit card companies must apply consumers’ payments above minimum requirements to balances with the highest interest rates. A consumer carrying a balance may have multiple balances with different interest rates.
* Credit card payments received by 5 p.m. on the date due are considered on time.

Search

User

Recent Topics

Forum Themes

Site Navigation