Congress recently passed the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act... cute, huh?). Here are some of the highlights.
- Companies required to mail statements at least 21 days before the payment is due.
- The payment due date is required to stay the same each month.
- Credit Card companies will be required to show how long it will take to pay off your balance making only the minimum payment. *I think this is a great change. Too many people don't realize the impact of small payments with high interest. Too bad they don't show how much total interest you would end up paying.
- You can no longer be charged an over-the-limit fee for transactions that exceed your credit limit unless you sign an agreement saying that you specifically want to allow transactions that will exceed your limit.
- Payments in excess of the minimum amount will be required to pay off balances with the highest interest rates first.
- Companies won't be able to increase rates on the existing balances for the most part, but they will be allow to increase the rate on new purchases after the first year. A penalty rate cannot be applied unless you don't make your payments for more than 60 days, and then a 45 day notice is required before the rate change. *I disagree with this provision. I think it is the companies right to fluctuate the rate in response to the market. If you don't want to be subjected to market changes in interest rates, then you shouldn't take out unsecured credit.
- For rate changes on new purchases, 45 days notice will be required. Also, you will have the option to close your account if you disagree with the new rate.
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