The rules are changing for credit card issuers - make sure you know them
I was giving a talk recently and asked everyone who had credit cards to give them to me. Then I issued a challenge: Can anyone tell me at least three of the changes under the Credit Card Accountability, Responsibility and Disclosure Act of 2009? Several of the rules take effect this month. Yet not a soul could name one. While most of the provisions don’t kick in until next year, a few key provisions begin Thursday. They are:
■ Creditors must provide written notice to consumers 45 days before an interest rate increase or making a significant change to account terms.
■ Creditors must inform consumers in the same notice of their right to cancel the account before the change.
■ Creditors generally must mail or deliver statements at least 21 days before payment is due. Starting in February, due dates must be on the same day each month. If your due date falls on a day the creditor does not accept payments by mail (such as weekends), the creditor cannot treat a payment received the following business day as late.
The rules are coming at a time when many cardholders are expressing frustration. In a survey by Consumer Action, respondents reported that their interest rates have been shooting up, minimum payments are rising, and credit limits are being drastically cut. Several major banks recently informed cardholders that they will be moving them from fixed rates to variable rates. Why?
Under the CARD Act, issuers cannot raise interest rates on existing balances except under certain limited conditions. One of those conditions is if the card carries a variable indexed interest rate. The survey found that some issuers boosted interest rates up to three percentage points between March and June.
Grace periods - the number of days after the close of the last billing cycle in which you can pay off new bills without being charged interest - are shrinking. Consumer Action said one card issuer had reduced the grace period to six days. Typically issuers give cardholders a grace period of 20 to 25 days.
The changes consumers are grousing about now are permitted under current law. For example, companies can offer fixed rates but if you read the tiny print on your statements, you will see they reserve the right to snatch back that rate.
Can you name three changes under the CARD Act? Or does it matter to you?
After all, in the past, no matter what the card companies did to us - moving the due dates; jacking up interest rates - we still played their credit card game. We complained. Perhaps you may have even canceled a particular card but then signed up with another issuer.
The CARD Act will make the game a little fairer. But how will you know if the card company is abiding by the new law if you don’t know what the law is? If you want to know the rules, go to www.consumer-action.org. In the search field, type in “New credit card provisions.’’