By KATY CARPENTER for Smart
Thanks to some new rules and regulations, your credit card bill has a lot more to say these days.
Are you listening?
The Credit Card Accountability Responsibility and Disclosure Act of 2009 — aka the Credit CARD Act — took effect in stages this year, with the final changes becoming law in August.
Kristen Garrett, spokeswoman for the nonprofit Consumer Credit Counseling Service of Greater Harrisburg and York, says the act offers more protections and disclosures for the consumer.
However, she said, “it is still up to the consumers to educate themselves.”
But, Garrett warned, “All of these changes don’t mean that people don’t have to pay their bills on time.”
With Garrett’s advice as well as information from the Federal Deposit Insurance Corp. and the Board of Governors of the Federal Reserve System, we’ve prepared this sample revamped bill to help you understand what’s changed.
Your bill must be mailed or delivered at least 21 days (up from 14 days) before your payment is due.
In due time
Your due date will be the same date each month. “If your credit card payment is due on the 17th of the month, it will always be due on the 17th of the month,” Garrett said.
Your company must accept payments made by 5 p.m. (up from noon) on the due date. If your payment due date is on a weekend or holiday, you’ll have until 5 p.m. the following business day to pay.
Bills must disclose the amount of a potential late fee and the date it would be charged. Plus, it must include a notice that one or more late payments can trigger an increase in your interest rate, and it must show the penalty rate.
Your bill now must tell you how long it will take to pay off your balance by making only minimum payments. Plus, it must show what your monthly payment would be in order to pay off your balance in three years. “This is going to be a real wake-up call for a lot of consumers,” Garrett said.
If your company ups your APR, it must give you 45 days’ notice (up from 15 days) in writing (with few exceptions). Plus, it must re-evaluate that rate increase every six months, and if appropriate, it must reduce your rate within 45 days of the evaluation.
You must also get 45 days’ notice if the company is changing certain fees (i.e. annual, cash advance and late fees) or other major terms.
In all of these cases, the company must give you the option to cancel the card before the changes take effect.
The key here, Garrett said, is to make sure that you open and read all of your mail from your credit card companies.
“If you don’t read it, it’s not going to help you,” she said.
Add it up
Your bill must include how much you’ve paid in interest and fees so far this year. If these totals startle you, Garrett hopes it can motivate you to pay off your balance as quickly as possible: “Look at this and think, ‘What else could I have done with that money?’ ”
GOOD TO KNOW
Some highlights from the Credit CARD Act:
Your interest rate on a new account can’t increase for the first 12 months (with a few exceptions). If your company does hike your rate after year one, the new rate will apply only to new charges.
Under 21? You’ll need to show you can handle making payments or you’ll need a cosigner to open an account. If you have a card with a cosigner and want to increase your limit, your cosigner must agree in writing.
The goal here, Garrett said, is for fewer young adults to face the double whammy of student loan AND credit card debt.
Know your limits
Your company can’t charge fees for making a purchase that would put your account over its credit limit unless you “opt in” (agree) for the company to process over-the-limit transactions and charge a fee.
If you do opt in — Garrett strongly advises against this, by the way — an over-the-limit fee can be imposed only once during the billing cycle when you exceeded the limit, not for each transaction that exceeds the credit limit. And if you remain over your limit but don’t make any more transactions, another fee can be charged only once during each of the next two billing cycles.
Your company can’t charge you inactivity fees (i.e. for not using your card).
Your credit card company can’t charge a late-payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can’t be more than $20.
Similarly, if you exceed your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.
If you make more than the minimum payment on your bill, your company must apply the extra to the balance with the highest interest rate.
If you’re late making your payment, your company can’t charge you a fee of more than $25 unless:
1. One of your last six payments was late, in which case your fee may be up to $35.
2. Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.
Having trouble making payments? On the back of your monthly statement, you will now find the number for a reputable, nonprofit debt-relief agency.
Tags: Consumer Credit Counseling Service of Greater Harrisburg and York, credit card, Credit Card Accountability Responsibility and Disclosure Act of 2009, Credit CARD Act, Federal Deposit Insurance Corp., interest and fees, Katy Carpenter, Kristen Garrett