Credit Card Accountability, Responsibility, and Disclosure (CARD) Act
The new laws governing credit cards (effective February 22, 2010) provide several consumer protections. However, be aware that the law only covers personal credit cards, NOT business or corporate cards.
Credit cards must allow at least 21 days to pay the bill from the time it is mailed. They can not charge you late fees if the due date was on a weekend or holiday and your payment arrived on the following business day, can't change the due dates each month, and can't set mid-day deadlines.
Over the Limit Fees
You now need to 'opt-in' to allow over-limit charges to be processed and agree to over-limit fees. Otherwise the credit card company may deny charges that would put you over your credit limit, but they can't apply a $35+ fee because they accepted a charge that put you $1 over your credit limit. They also can't charge an over-limit fee if the reason you are over-limit is because of new interest or other fees, and they can't charge multiple over-limit fees during a single billing cycle.
Surprise Rate Increases
Credit card companies must provide at least 45 days written notice of increases in the annual percentage rate, unless your rate is based on the prime rate or your account was opened with a special introductory rate with a specific time limit. Any new rates can not be applied to existing balances, only to new charges, so if your rates go up, the old balance will continue at the old rate.
Credit card companies can no longer raise the rate on existing balances because you were late on an unrelated bill. In the past if you were late on another card, your mortgage, or possibly even your electric bill, your credit card interest rates could skyrocket. That can't happen anymore; default rates can only go into effect on a credit card if you were late with them or another bill from one of their companies, not someone else. A word of caution - if you have both a credit card and a mortgage, car loan or other debt with the same company, your credit card could still go to a default rate if you are late with a loan payment.
High Interest Balances
If you have balances at more than one rate (like old charges at your usual rate and a new low-interest balance transfer), anything you pay over the minimum must be applied to the highest rate balances first. In the past, anything you paid usually went to the balance with the lowest interest rate first, while any other balances continued to rack up interest charges at the higher rate.
Double Cycle Interest Charges
You can no longer be charged interest on a two-month average balance. Some card companies would charge interest on prior months even if you paid those balances in full within the grace period, if there was a month along the way that you didn't pay in full. They can't do that anymore.
Contract terms and conditions must be stated in plain language, not legalise, and clearly explain any fees and the reasons they would be applied. Statements need to clearly show current and YTD fees and the reasons for them. Statements must also periodically show how long it will take to pay off a balance if you only pay the minimum, and how much you would need to pay each month to pay off your balance within three years at the current interest rate.
If you pay your credit card in person at a local office for the card company, they must credit your account on the day you pay. They can no longer credit the payment for the next day and charge you a late fee because, for example, you paid after 2pm on the due date.
Credit card contracts must be available online, as well as in hard-copy, so you can review them at any time.
First Year Safeguards
The terms of the credit agreement must be clearly spelled out and generally remain the same for the first year.
Credit card companies can no longer offer credit cards to people under 21, unless the person has a co-signer or shows they are financially able to pay the bills themselves. Credit card companies can no longer offer special student bonuses or incentives to sign up, which should slow down debt on college campuses.
Many gift cards have inactivity fees and short expiration dates. The new law requires greater disclosure of the terms of any gift cards.
The downside: many credit card companies have added or increasing annual fees, balance transfer fees, or other charges to make up for the lost revenue from late fees and interest. Also note that with so many credit card companies and banks merging in the past few years, you may not be aware that two separate bills come from the same related companies; if you are late with one, default rates could kick in on another, even with the change in the law regarding universal default.