foodconsumer.org: New credit card laws are here.  How do they affect you?

New credit card laws are here.  How do they affect you?
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admin on 02/23/2010 12:07:00
 
BY Denise Reynolds
Yesterday, new federal regulations took effect as part of the Credit Card
Accountability, Responsibility, and Disclosure (CARD) Act of 2009 with a primary
focus to eliminate unexpected fees and interest-rate hikes.  The new law could
potentially save consumers about $10 billion a year.
The key provisions of the bill include:
·         Interest Rates:  Card issuers cannot increase rates during the first
year on new accounts and in most cases, retroactive rate increases are
prohibited.
·         Payments and Billing:  The issuer has to set the payment due
deadlines on the same day each month.
·         Fees:  Consumers cannot be charged extra fees for making payments
online, by phone, or by mail.
·         Disclosures:  Issuers must notify cardholders of significant changes
to their account terms at least 45 days before the changes take effect.  They
must also inform consumers about the repayment costs for outstanding balances,
such as how long it will take to pay off a card if only the minimum payment is
made each month.
·         Younger Customers:  Consumers under the age of 21 will need an adult
co-signer to open a credit card.  In addition, issues cannot entice students
with incentives or gifts within 1,000 feet of a college campus.
However, the law does have some downside – the tougher rules will make credit
more costly for good customers.  If the card issuer cannot impose a retroactive
hike on an existing balance, they may try to make up the difference elsewhere
– likely in the form of annual fees or inactivity fees for those who do not
use their credit cards as often.
Also, overdraft protection is no longer automatic on credit cards.  Approval is
needed and will carry a hefty service fee.
What should consumers do in regards to the new rule changes?
1.    Stick to fixed card rates.  Advance notice of changes in card terms may
not apply if the card has an introductory rate or a variable rate condition.
2.    Pay more than the minimum.  The regulations require that additional monies
paid over the minimum must be applied to the balances with the highest interest
rates first.
3.    Review each statement for announcements of credit term changes or service
fee initiation.  Also be aware of any reduction that may be made to your credit
limit.
4.    Carefully review the fine print of rewards programs.  Companies may be
able to charge service fees for awards programs.
5.    Foreign use of cards may carry transaction fees.  Check the card
guidelines if you travel outside of the US or if you may foreign transactions
online.
6.    Be mindful of your credit rating.  If you cancel a card because you’ve
received advance notice of a raise in fees, it could possibly hurt your credit
rating if you are seeking a new or revised loan.  Of course, the small effect on
the credit rating is likely more preferable to carrying high credit card
balances.