CARD Act
 
In 2009, President Obama passed a bill entitled “Credit Card Accountability Responsibility and Disclosure” (CARD) Act.  This bill has been put in place to protect consumers by regulating credit card issuers.  I would like to outline the new regulations as well as their effective dates.
 

August 20, 2009
  •  45 day advance notice of any significant changes to the terms or conditions of your account.
  •  Requires that credit card issuers mail statements at least 21 days prior to the due date, which was previously 14 days.

February 22, 2010
  • Consumers who are casually delinquent (30 days) will NOT see interest rate increases.
  • Consumers who are 60+ days delinquent will be subject to an increased interest rate.  The consumer can earn the original interest rate back if they make on-time payments for 6 consecutive months.
  • The CARD Act automatically opts out all consumers from allowing credit cards to be charged above and beyond the credit limit.  If a consumer wants to be able to spend more than the limit, they must contact the credit card issuer and opt in.  This will result in an over-limit fee.
  • An over limit transaction results in the card issuer being able to increase the interest rate if the card has been open for at least 12 months.
  •  Interest rates cannot increase on credit card accounts opened for less than 12 months unless:
1.      There is a promotional rate offered in the contract for a shorter period.
2.      The original interest rate is variable as stated in the contract.
3.      Delinquent payments have been made within the first 12 months.
  •  No Universal Default—interest rates on all credit cards cannot increase if you are late on one credit card account.
  • If an account is more than 12 months old, it is subject to increased interest rates.  The increased interest rate can only affect new purchases.  Existing purchases must be calculated at the original interest rate.
  • Payments must be applied to the highest interest rate balances first.
  • Payments received by 5pm local time must be credited that day.
  • Convenience fees can no longer be charged—branch, phone, and on-line payments.
  • Consumers under 21 years of age will not be able to get a credit card unless they have a co-signer older than 21 or can show proof of employment.
  • Account Terms Disclosure must be written in layman terms and easier to understand for the consumer.
  • The “Experian Rule”.  Getting a credit report from an on-line credit monitoring service does not count as your free credit report under the FACT Act.
August 2010
  •  Gift cards can no longer expire or charge inactivity fees until 5 years after the issue date.  Currently, gift cards can lose value after 12 months.
Keep in mind that the CARD Act does not regulate Retail Store Credit Cards or Debit Cards.  Also, because Credit Card companies stand to lose BILLIONS of dollars in interest and fees, consumers will see banks and card issuers increasing ATM and Cash Advance fees as well as creating new ones.
 
As a credit expert, I provide credit education helping people understand how to build and improve their credit scores.  If you, or someone you know, is having issues with credit, contact me to find out how I can help.
 
Kevin D. Weier

Credit Coach, LLC ·  Three Point Place, Madison, WI  53719
Phone: (608) 268-6677 · Cell: (608) 774-2434 · FAX: (866) 311-7478
Web: www.creditcoachwi.com · Email: [email protected]