About Credit Card Due Date Regulations

Most credit card companies assess steep penalties for late payments. They charge a free for each late payment and often raise the account's interest rate. However, many companies send their statements so close to the due date that consumers have difficulty mailing back a payment that arrives before that date. New rules adopted by the Federal Reserve Board will remedy this in 2010.

History

In late 2008, the Federal Reserve Board gave its approval to new rules aimed at protecting consumers from unfair practices by credit card issuers. The rules were written based on perceived problems in the credit card industry and over 60,000 letters sent to the board by consumers. One of these rules addresses credit card due dates.

Specifics

The rules regarding credit card due dates forbid banks from counting a payment as late unless they have given a consumer a reasonable period of time in which to make the payment. The banks will be required to mail their statements at least 21 days before the payment is due.

Currently, the Truth in Lending Act only requires the bill to be mailed out 14 days prior to the due date or the expiration of a grace period if there is one offered by the credit card issuers.

Significance

These rules were developed in response to problems that caused a significant number of consumer complaints. Many credit card users reported that their card issuers did not allow adequate payment time. They charged that their statements arrived within days of the due date. This prevented them from being able to send in a payment that would arrive and be credited before that date. The payments were counted as late, and consumers faced late charges, additional interest payments and higher interest rates.

Purpose

According to the Federal Reserve Board, the new rules are designed to protect consumers from unfair practices by credit card companies that relate to the payment due day. The Board created the rules to ensure that credit card holders will have a reasonable amount of time to make their payment before additional interest or late fees are assessed.

Support

The rules that were issued by the Federal Reserve Board were adopted under the Federal Trade Commission Act. At the same time, the National Credit Union Administration and the Office of Thrift Supervision issued their own final rules, which were very similar to those of the Board.

Timeframe

All of the new rules issued by the Federal Reserve Board, including those regarding credit card due dates, will go into effect on July 1, 2010.

Resources

• Information from the Federal Reserve Board
• More information on the new due date regulations