Here are some key
changes you should expect from your credit card company
beginning on February 22, 2010.
What your credit card company has to tell
- When they plan to increase your rate or
other fees. Your credit card company must
send you a notice 45 days before they can:
- increase your interest rate;
- change certain fees (such as
annual fees, cash advance fees,
and late fees) that apply to
your account; or
- make other significant
changes to the terms of your
If your credit card company is going to make
changes to the terms of your card, it must give
you the option to cancel the card before certain
fee increases take effect. If you take that
option, however, your credit card company may
close your account and increase your monthly
For example, they can require you to pay the
balance off in five years, or they can double
the percentage of your balance used to calculate
your minimum payment (which will result in
faster repayment than under the terms of your
The company does not have to send you
a 45-day advance notice if:
- you have a variable rate
tied to an index; if the index
goes up, the company does not
have to provide notice before
your rate goes up;
- your introductory rate
expires and reverts to the
previously disclosed "go-to"
- your rate increases because
you are in a workout agreement
and you haven't made your
payments as agreed.
- How long it will take to pay off your
balance. Your monthly credit card bill will
include information on how long it will take you
to pay off your balance if you only make minimum
payments. It will also tell you how much you
would need to pay each month in order to pay off
your balance in three years. For example,
suppose you owe $1,784.53 and your interest rate
is 21.99%--your bill might look like this:
- Late Payment Warning: If we do not receive
your minimum payment by the date listed above,
you may have to pay a $35 late fee and your APRs
may be increased up to the Penalty APR of
- Minimum Payment Warning: If you make only
the minimum payment each period, you will pay
more in interest and it will take you longer to
pay off your balance. For example:
|If you make
this card and
each month you
||You will pay
off the balance
shown on this
||And you will
end up paying an
New rules regarding rates, fees, and limits
- No interest rate increases for the first
year. Your credit card company cannot
increase your rate for the first 12 months after
you open an account. There are some exceptions:
- If your card has a variable
interest rate tied to an index;
your rate can go up whenever the
index goes up.
- If there is an introductory
rate, it must be in place for at
least 6 months; after that your
rate can revert to the "go-to"
rate the company disclosed when
you got the card.
- If you are more than 60 days
late in paying your bill, your
rate can go up.
- If you are in a workout
agreement and you don't make
your payments as agreed, your
rate can go up.
- Increased rates apply only to new charges.
If your credit card company does raise your
interest rate after the first year, the new rate
will apply only to new charges you make. If you
have a balance, your old interest rate will
apply to that balance.
- Restrictions on over-the-limit
transactions. You must tell your credit card
company that you want it to allow transactions
that will take you over your credit limit.
Otherwise, if a transaction would take you over
your limit, it may be turned down. If you do not
opt-in to over-the-limit transactions and your
credit card company allows one to go through, it
cannot charge you an over-the-limit fee.
- If you opt-in to allowing
transactions that take you over
your credit limit, your credit
card company can impose only one
fee per billing cycle. You can
revoke your opt-in at any time.
- Caps on high-fee cards. If your
credit card company requires you to pay fees
(such as an annual fee or application fee),
those fees cannot total more than 25% of the
initial credit limit. For example, if your
initial credit limit is $500, the fees for the
first year cannot be more than $125. This limit
does not apply to penalty fees, such as
penalties for late payments.
- Protections for underage consumers.
If you are under 21, you will need to show that
you are able to make payments, or you will need
a cosigner, in order to open a credit card
- If you are under age 21 and
have a card with a cosigner and
want an increase in the credit
limit, your cosigner must agree
in writing to the increase.
Changes to billing and payments
- Standard payment dates and times.
Your credit card company must mail or deliver
your credit card bill at least 21 days before
your payment is due. In addition:
- Your due date should be the
same date each month (for
example, your payment is always
due on the 15th or always due on
the last day of the month).
- The payment cut-off time
cannot be earlier than 5 p.m. on
the due date.
- If your payment due date is
on a weekend or holiday (when
the company does not process
payments), you will have until
the following business day to
pay. (For example, if the due
date is Sunday the 15th, your
payment will be on time if it is
received by Monday the 16th
before 5 p.m.).
- Payments directed to highest interest
balancesfirst. If you make more than the
minimum payment on your credit card bill, your
credit card company must apply the excess amount
to the balance with the highest interest rate.
There is an exception:
- If you made a purchase under
a deferred interest plan (for
example, "no interest if paid in
full by March, 2012"), the
credit card company may let you
choose to apply extra amounts to
the deferred interest balance
before other balances.
Otherwise, for two billing
cycles prior to the end of the
deferred interest period, the
credit card company must apply
your entire payment to the
deferred interest rate balance
- No two-cycle (double-cycle) billing.
Credit card companies can only impose interest
charges on balancesin the current billing
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by
the late Loren Dunton (creator of the Certified Financial Planner (CFP)
designation and founder of the College for Financial Planning in Denver, CO.)
The ICFE is dedicated to helping consumers of all ages to improve their spending
practices, increase savings and use credit more wisely.
The ICFE is an
award winning, nonprofit, consumer education organization that has helped
millions of people through its financial continuing education courses programs
and resources. In addition to eight Certification courses covering identity
theft, credit files, credit repair and credit scoring, among others, it also
publishes the Do-It-Yourself Credit File correction Guide, which is updated
annually. The ICFE has distributed over one million Credit/Debit Card Warning
Labels and Credit/Debit Card Sleeves world wide.
The ICFE is a partner
with the national Jump$tart Coalition for Financial Literacy and the California
Jump$tart chapter. The ICFE staff is also active with San Diego Saves and
Military Saves, both offshoots of America Saves.
The ICFE is also an
on-line help for consumers who spend too much. ICFE's spending help was featured
in PARADE Magazine in the Intelligence Report section. The money helps and tips
are from the ICFE's Money Instruction Book, our course in personal finance.
The ICFE helps consumers and students with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
how to teach children about money. Other ICFE services include: Ask Mr. G
library, a free eNews service, and an online resource center for students,
parents and educators, plus financial education learning tools in the ICFE Book