Overlooked Rules in the Credit Card Reform Act
By: Brian O'Connell

Economic experts are already calling 2010 the Year of Accountability, as the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 kicks into high gear.

Consumers may have already heard about some of the higher-profile rules coming from the CARD Act, most of which trigger on Feb. 22:

  • Credit card issuers must give customers 45 days notice of any imminent interest rate hikes.
  • Card issuers have to bill consumers at least 21 days before payments are due (to stem a flood of late payment fees).
  • Credit card companies must allow customers to “opt out” of any rate hikes (although if you do so the bank/creditor can close your credit card down.
  • If you have a good payment history, credit card firms cannot raise your interest rates with two exceptions: when a “teaser” rate expires or when the card comes with a variable-rate hook (card issuers are offering more variable-rate cards already).
  • If card companies do raise fixed-rate interest rates, they can only raise rates on new purchases — not purchases already made and listed on your credit card.

But what about some overlooked lesser-known changes coming on the credit card front?

For example, if you decide to close your card down to avoid higher rates, card companies can’t force you to pay the remaining debt all at once. What card issuers can do is set up a repayment plan that guarantees the card debt will be paid off within five years.

Also, late-payers will be in even hotter water after the card reform rules take effect. For example, if you’re 60 days late paying your credit card bill, the card company can hike interest rates higher than they could before the new credit card law takes effect. The good news is that, with six straight months of on-time payments, the card issuers must reinstate that lower interest rate.

The new card rules impact consumers who prefer making minimum card payments. After Feb. 22, card issuers must inform customers how long it will take to pay off their credit card debt making just minimum payments.

In addition, credit card companies must get your consent before charging fees for transactions that exceed the credit limit. And, for subprime credit card customers, the CARD Act puts a cap on high fees — only up to 25% of the total card’s spending limit.

For a full summary of the changes coming from the CARD Act, read the Senate's copy of the bill.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

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