Wednesday 19th of December 2018

Credit Cardholders’ Bill of Rights

The old adage “the devil’s in the details” used to ring especially true when it came to credit card agreements. Lenders would hook consumers with appealing promotional rates and then bury the truth about the product in endless pages of bewildering fine print. By the time consumers realized what was happening, they had already accumulated a mountain of debt that seemed to come out of nowhere. Commonly, unscrupulous lending practices either contributed to or caused cardholders’ mounting debt.

To remedy this plight, lawmakers decided to take action against predatory lending practices in the credit card industry. In the fall of 2008, the House passed the first incarnation of the Credit Cardholders’ Bill of Rights. The law eventually made its way through the Senate, and President Obama finally signed the legislation on May 22, 2009. Known as the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act of 2009), the law became part of the extant federal Truth in Lending Act. The law will officially take effect on July 1, 2010. Below, you’ll find highlights of the changes the law will bring about.

Finance Charges & Interest Rates

The Credit CARD Act imposes stricter regulations on interest rates and finance charges, including:

  • No double-cycle billing charges
  • No increases on interest rates for the first year after opening a card unless the rate increase was specified when you opened the account
  • Introductory rates must last a minimum of six months
  • Interest rate increases may apply only to new balances
  • 45-day notice is required for interest rate increases
  • The issuer may increase your interest rate if you fail to make the minimum payment within 30 days of the due date

Payment Fees & Allocation

  • Payments made in excess of the minimum must be applied to the balance with the highest interest rate
  • The issuer may not charge any fees to pay your bill online, over the phone, or by mail unless the bill is due the same or next day
  • Payments must be due on the same date every month

Limits and Over-Limit Fees

  • Credit card issuers cannot charge over-the-limit fees unless the cardholder requests that the issuer process over-the-limit charges. If the cardholder does not opt in, the card issuer will deny the transaction and no charges will be assessed.
  • Card issuers may charge only one over-the-limit fee per billing cycle
  • Only one over-the-limit fee is permitted for each over-limit transaction
  • A hold on your credit limit cannot result in over-the-limit fees (e.g., a hold on your card placed by a car rental company)

Billing & Payment

  • Billing statements must be sent out 21 days before the due date
  • Mailed payments are on time if received by 5 PM on the due date
  • Payments for which the due date falls on a weekend or a holiday are not due until the next business day
  • Payments made at local branches must be credited to the account the same day
  • All new accounts that are never activated or used or are closed within 45 days must be removed from your credit report