Card Issuers, Consumers Adjust to New Rules
The Credit Card Act of 2009 requires card issuers to send a notice 45 days before increasing rates or making significant changes to annual or late fees. There are other restrictions, including:
- No interest rate increases for the first year that an account is open.
- Payment must be due on the same date each month.
- In most cases rates cannot be increased on existing balances, just on new charges.
Another change requires issuers to apply any payments above the required minimum to the balances carrying the highest interest rate.
Beginning Feb. 22 credit card companies will be banned from charging over-the-limit fees, unless the consumer has explicitly authorized the issuer to allow transactions over his or her available credit. Without such permission, the issuer must deny the transaction.
Consumers are making adjustments to the new credit reality as well. It is worth paying attention to all those notices we have been receiving in the mail. They will tell you what changes, if any, will be made to your account. If you decide not to accept the new terms, do not close your account immediately, as it may have an adverse effect on your credit. Start using the card and pay down the balance instead.
