New Credit Card Legislation

Date Posted: Mar 11, 2010

You may have noticed that your recent credit card billing statement has a new look. You now receive an account summary each month, along with information as to how long it will take you to pay off your current balance if you only pay the minimum each month.  You also are told how much you will have paid.  The reason behind the act is to encourage consumers to pay more than the minimum on their bills so that they don’t find themselves in credit difficulty.

My son’s March Visa bill shows a balance of $1,694.  The minimum payment due is $26.  If he makes only the minimum payment (& no additional charges) it will take him 13 years to pay off this balance, plus he will have paid $2,862.82.  Wow!  

Other helpful parts of the new act are:
•    You now have at least 21 days from when your bill is posted online (or mailed) to pay before you are charged a fee.
•    In most cases, credit card companies must give you 45 days notice when raising interest rates. 
•    Consumers can cancel a card and have 5 years to pay off the balance at the original interest rate.
•    Interest rates on existing balances cannot be raised unless you are more than 60 days late with a payment.
•    You will not have to pay over-the-limit fees unless you give pre-approval for purchases that exceed your limit. 
•    If you have charges with different interest rates, your payments above the minimum must be applied to the charges with the highest interest rates.

Banks are more likely now to charge an annual fee for having the car.  Also,  some banks increased rates just before the law went into effect.  Check your statements and compare with previous ones to see if this happened to you.  Contact your credit card company if your rates were recently increased and ask for them to be lowered.

The new law does not prevent credit card companies from adding additional fees, such as processing fees or inactivity fees.  Companies that resort to adding such fees might be ones you want to discontinue business with.  There are many other credit card offers out there, so be choosy and select a credit card that is the best for your situation.

SOURCES:  Atlanta Journal Constitution, New York Times, Real Simple Magazine.