New restrictions on credit card companies
The new credit card law, which took effect February 22nd, 2010, provided some new protections for consumers:
1. No interest rate increases during the first year you have a new card unless you selected a variable rate or a promotional rate (“Zero percent interest for first six months”) or the required minimum payment is not received within 60 days after the due date.
2. Credit card issuers cannot raise interest rates on existing balances unless one of the following is true:
- The increase is under a variable interest rate
- It is the end of a promised time period for a promotional rate.
- The required minimum payment is not received within 60 days after the due date.
3. Forty-five day notice is required to raise the interest rate on future purchases, except that no notice is required for increases due to one of the reasons state above.
4. Credit card issuers canít change the terms for repaying a balance, except that the issuer may give the cardholder either five years to pay off the outstanding balance at the old rate or an increased minimum payment that has no more than twice as much of a contribution to paying down the balance as the old minimum payment.
5. Increased interest due to late payments can be reversed.
The rate must go back to the original lower rate if the consumer makes the next 6 minimum payments in a row.
6. They cannot charge you an over-limit fee unless you have asked for the account to be set up to allow transactions which will exceed the credit limit.
7. Only one over-limit fee may be charged in a billing cycle if your balance is above the credit limit on the last day of the billing cycle.
8. They cannot charge you fees to make a payment except for expedited payments arranged through a service representative.
9. A card issuer who increases your interest rate must review the account every 6 months and decrease the rate if indicated by the review. (This is not effective until August, 2010)
10. Penalty fees (late fees, over-the-limit fees, etc.) must be reasonable and proportional to the omission or violation. (Also not effective until August 2010)
11. Two-cycle billing is prohibited. An issuer cannot reach back to an earlier billing cycle when calculating the amount of interest charged in the current cycle. (This prevents them from charging you interest in the current cycle if you paid everything off from the last billing cycle.)
12. Card issuers now have to consider your ability to pay. They must consider your ability to make the required payments under the credit cardís terms before raising limits or issuing a new card.
13. Payments above the minimum must be applied to highest interest rate balances, except in the last two months before a deferred interest balance is due.
14. Prohibits credit card issuers from setting early deadlines for payments or changing due dates. Payments must be received by 5:00pm at a location set by the issuer. Due dates must be on the same day each month.
15. Your bill must be mailed 21 days before the due date. Card issuers cannot treat a payment as late unless the bill is mailed at least 21 days before the due date.
Protects young consumers
16. No cards can be issued to a person under the age of 21 unless the card issuer has an application which contains either a co-signer over 21, or information indicating an independent means of repaying any credit extended (like a job).
17. Card issuers may not raise the credit limit on accounts held by a person under the age of 21 who has a cosigner without written permission from the cosigner.
18. No pre-screened credit card offers to people under the age of 21 unless the consumer has consented to receive pre-screened offers.
19. Card issuers have new restrictions on providing tangible gifts to students on campus in exchange for filling out a credit card application.
20. Colleges must publicly disclose any marketing contracts made with a card issuer.
21. Advertisements for free credit reports must disclose the web site that provides free credit reports under Federal law: AnnualCreditReport.com.
22. Card issuers are restricted from financing fees and charges for opening a credit card where the fees and charges total more than 25% of the credit limit.
23. Issuers now must disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made.
24. Requires 45-day written notice before the issuer can raise the APR or make any other significant change to the card agreement.
25. Periodic statements must clearly state the required due date and late payment penalty.
26. Credit card agreements will be posted online and the Federal Reserve Board must keep a public website providing them to the public.
27. Gift cards cannot expire less than five years from the date the card was purchased or money was last added to the card, whichever is later. (This is effective in August 2010.)
28. They cannot charge non-use fees if the card has been used within the past 12 months. If a card remains unused for 12 months, then there can be one fee a month.
29. Where state laws are stronger, they continue to apply, including for both expiration dates and fees.
The bill covers both retailer gift cards and prepaid general use gift cards (the ones that often are branded as Visa, American Express, MasterCard, or Discover.) The law does not cover rewards, loyalty, telephone or promotional cards and does not cover paper gift cards or paper gift certificates.
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