What The New Credit Card Rules Mean For You
 By Patrick L. Wynne

The provisions in the Credit Card Accountability Responsibility and Disclosure (CARD) Act that passed last year are now going into effect and should save consumers at least $10 billion a year, reports the Pew Foundation. The savings come from new rules governing the fees and penalties that credit card issuers can charge cardholders.

These rules were implemented in response to consumer concerns voiced during the past few years. Cardholders complained that card issuers sometimes raised interest rates without notice. They said that credit card companies imposed fees on bills that were paid just a few hours late.

Consumers also complained that the credit card contracts were difficult to understand and that the terms in the contract weren’t explained in straightforward language.

Congress agreed. And the CARD Act addresses many of the complaints.

Know The New Rules
With a few exceptions, the terms that you agree to when you sign up for a card must stay in place for at least one year. Even promotional rates for new account holders must last a minimum of six months.

When the credit card company raises its interest rate, it can only apply that rate to new charges for cardholders in good standing. Rates can’t be applied retroactively to existing balances.

Your payments must be applied to your highest interest-rate balances first.

In addition, payment due dates must be clearly indicated and consistent from month to month. The credit card statements must be sent at least 21 days before the payment deadlines.

Consumers will be told when they’re about to exceed their credit limit, which will enable them to avoid over-limit fees.

Understand Your Costs
New rules should also make it somewhat easier to understand your credit situation.

Your monthly statement will now include information about paying off your outstanding balance. You’ll be able to see how long it will take you to pay off your outstanding balance if you only pay the minimum amount due. And it will show you how much that will cost you in interest. The statement will also show you how much interest you would pay if you take three years to pay off your debt.

These disclosures may be a valuable wake-up call for many consumers who don’t realize what their outstanding balances are costing them.

Opt Out
In most cases, a credit card company must now let you know 45 days before it raises your interest rate. And when a company is raising its rates or imposing a new fee, it must now ask cardholders in advance if they will accept the new terms.

Consumers will have the option of canceling the account before those increases go into effect. And they’ll be able to pay off their balance at the old, lower interest rate.

That gives you the power to opt out of any unattractive deals.

Protect Yourself
Even though the CARD Act contains many consumer protections, it’s still important to protect your credit and your credit cards. Stolen cards can easily lead to identity theft.

AFS can help with Identity Theft 911^® expert identity theft resolution services. This AFS member benefit includes:

• Unlimited access to a personal advocate via toll-free number
• Systematic notification to credit bureaus and creditors
• A 3-in-1 credit report and one year of credit monitoring
• Assistance in handling all documentation and phone calls needed to resolve your case
• And much more

(Posted August 2010)

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