Credit Card Rules & Regulations
New credit card rules take effect in 2010 that give consumers more protection from card companies' practices and policies. The regulations mean stricter guidelines for enacting interest rate increases while also giving companies more responsibility for informing you about an increase. Other rules involve the ability of the company to charge fees, such as for late payments.
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Rate Increases
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Federal law as of February 2010 prevents your card company from increasing your interest rate for the first year after you open your account. One exception: If your rate is tied to an index, such as LIBOR, it can go up whenever the index increases. Another exception: If you signed on for a special introductory rate, it can expire after six months. Also, if you are more than two months late with your payment, your rate can rise. As of Aug. 22, 2010, the company must re-evaluate your interest rate increase every six months and, if appropriate, reduce your rate.
Rate Increase Disclosures
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If your company plans to increase your interest rate at any time, it must inform you in writing at least 45 days in advance. This rule also applies to an increase in fees and to any other significant changes the company intends to make to your card policy. The company must give you the option of canceling the card before the increases take hold. The exceptions to the rule that requires notice of a rate increase are the same as the aforementioned exceptions about raising your rate in the first place. ) As of Aug. 22, 2010, if the company increases your rate for any reason, it must explain its decision in writing.
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Fees
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Your total fees, including annual fees and application fees, cannot exceed 25 percent of your initial credit limit. Penalty fees, such as for late payments, are exempt from this rule. But fees for late payments generally cannot be more than $25 as of Aug. 22, 2010, unless you have been late with a payment in the previous six months. Also, the company cannot levy a late-payment fee that is more than your minimum payment, nor an over-the-limit fee that is greater than the amount by which you exceeded your credit limit. The company cannot charge inactivity fees.
Balance Disclosures
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Your card company must include information on your monthly statement about how long it will take you to pay off your balance by making only the minimum payment. It also must break down how much you must pay each month to clear your balance in a three-year timetable.
Over-the-Limit Transactions
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The company cannot charge you a fee for going over your credit limit unless you have informed the company that you want it to allow such transactions. If you don't want your company to allow you to go over your limit and you attempt to make a purchase that would exceed it, the transaction might be rejected.
Billing
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You must have access to your credit card bill, either through mail delivery or online, at least 21 days before the due date for your payment. The due date must remain the same each month, and you must have until 5 p.m. on the due date to pay. If the due date falls on a holiday or weekend, you must have until the following business day to make your payment.
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