What's New!

New credit card rules mean new protections for you! Here are some of the changes that take effect February 22, 2010.

What your credit card company has to tell you:

When they plan to increase rates and/or fees: Your credit card company must tell you at least 45 days in advance before they can:

• Increase your interest rate;
• Change certain fees, such as annual fee, cash advance fees, and late fees, that apply to your account;
• Make other significant changes to the terms of your account

If your credit card company is going to make changes to the terms of your account, 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 payment.

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 account).

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" rate;
• 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 may look like this:

New rules regarding rates, fees, and limits

No interest rate increase 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 fir 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 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 only apply 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-the0limit transactions and you credit card company allows one to go through, it cannot charge your 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 fees. 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 pintail 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 account.

• 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
• 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.

Payments directed to highest interest balance first. If you make more than the minimum payment on your credit card bill, you credit card company must apply the excess amount to the balance with the highest interest rate. These 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 the two billing cycles prior to the end of the end of the deferred interest period, the credit card company must apply your entire payment to the deferred interest rate balance first.

No two-cycle (double-cycle) billing. Credit card companies can only impose interest charges on balances on the current billing cycle.

Disclosure of Overdraft and NSF Fees - Effective January 1, 2010

Financial Institutions will be required to provided monthly and year to date overdraft and NSF's fee on each periodic statement. They must include:

Disclosures Regarding Overdraft Protection

• The rule extends the requirement to disclose overdraft fees on periodic statements to all financial institutions. Previously, this requirement only applied to financial institutions that promoted the payment of overdrafts.
• Further, the rule requires account balances disclosed through an automated system such as an ATM, web site or automated phone service to include only the amount immediately available for withdrawal. Put another way, the account balance cannot include additional funds that the institution may provide as an overdraft service or other funds that may be transferred from another account.
• There is an exception to the rule financial institutions may disclose both balances at the same time, provided that there is a prominent notice that the second balance includes additional funds that are available via overdraft protection, a line of credit, etc.

Additionally, financial institutions must disclose overdraft and NSF fees for each statement period as well as a total for all calendar year-to-date fees. Finally, the year-to-date and periodic fees must be disclosed in close proximity to each other and in an easy to understand, tabular format.