Change Has Come to America’s Credit Cards

The new federal credit card rules finally took effect Monday to regulate the business that eaten America alive over the past years.   As per report, the rules, passed by Congress in May, seek to “level the playing field” between consumers and credit card companies, President Obama said.  Nonetheless, new regulatory bodies are needed to replace the fractured oversight of seven regulatory bodies that failed to prevent the abusive credit card practices. 

Among the changes that took effect Monday:

  • Increased interest rates cannot be applied retroactively to existing balances. New rates can apply only to new charges.
  • The interest rate on a fixed-rate credit card cannot be increased during the first year an account is open unless the customer is more than 60 days behind in making a payment.
  • Banks cannot automatically sign up customers for programs that allow them to exceed their credit limit for a set fee. Customers must proactively opt-in to such programs.
  • Fees on a credit card, such as the annual fee, cannot be more than 25% of the card’s initial credit limit.
  • People younger than 21 must show they can make credit card payments or have a co-signer to open an account.
  • Bills must denote how long it would take to pay off the card’s balance if only the minimum payment is made, and how much in total the customer would end up paying.
  • Payments over the minimum must be applied to the balance with the highest interest rate.
  • The due date for credit card payments must be the same every month, and payments cannot be due earlier than 5 p.m. on a business day. Customers have until the next business day when a due date falls on a weekend or a holiday.
  • Those provisions follow ones that took effect in August requiring banks to notify customers at least 45 days before increasing a card’s interest rate and to mail statements 21 days before the bill is due, up from 14 days.

The new rules are expected to help consumers but critics say it won’t solve all the problems. 

But as mentioned by one customer, “at least we’re no longer going to get run over by the train from behind,” he said. “Now we can see it coming and maybe jump to the next track.”

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