Notes On Consumer Affairs
On May 22, 2009, President Barack Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act). While portions of this Act became effective on August 20, 2009 the majority of its provisions went into effect on February 22, 2010. As a consumer, you should be aware of the new protections the CARD Act affords you and how you can take advantage of them.
The CARD Act requires credit card issuers to add important new features to monthly statements. Issuers must now state how long it will take cardholders to pay off their debt if they only make the minimum payment each month. They must also provide a monthly payment figure showing how much the cardholder must pay be to become debt free in three years. In addition, the statements must include a tollfree number where consumers can obtain access to information about credit counseling.
The CARD ACT also imposes new limits on fees. Cardholders must now tell their card issuer in advance if they want to allow transactions that will place them above their credit limit; if they do, issuers can only charge an over-thelimit fee once per billing cycle. Fees to make a payment online, via telephone, by mail, or by other means are not allowed unless they are for an expedited payment.
Credit card issuers are also limited as to when and how they can raise interest rates. They cannot raise rates on new accounts during the first year the account is open or on any existing balances except in certain circumstances. Such increases are allowed if the interest rate is a variable indexed rate; at the end of a promotional period that was at least six months in duration; or if the required minimum payment is not received within sixty days of the due date. If the increase is due to delinquent payments, the issuer must decrease the interest rate within six months if it receives from the cardholder the minimum payments on time during that period. At the end of the first year, card issuers can raise interests rate on future purchases and make other changes to the terms of the card agreement within forty-five days of providing written notice to the cardholder. Double cycle billing, the practice of using the balance due for a previous billing period to determine the interest charged in the current period, is largely prohibited.
Finally, card issuers must mail the monthly statement twenty-one days prior to the due date. They must also consider all payments received by 5 p.m as timely. The due date must be the same every month. If the due date falls on a day that the credit card issuer does not receive payments by mail, such as weekends and holidays, then payments received on the next business day cannot be considered late.
Even with these new protections, it is important for consumers to manage their own credit. Be sure to carefully read your monthly statements and all other mailings and disclosures you receive from your card issuer. It is also important that you check your credit report for accuracy. Under the CARD Act, card issuers cannot open a new account or increase existing credit lines without first assessing a person’s ability to pay, and to satisfy this requirement they will likely be using information contained in your credit report. Every twelve months, you can obtain a free copy of your credit report from each of the three major credit reporting bureaus by calling 1-877- 322-8228 or visiting www.annualcre ditreport.com.
For more information about the CARD Act, you may visit the New York State Consumer Protection Board website at http://www.consumer.state. ny.us.
If you believe your credit card issuer is in violation of the CARD Act, first call the issuer and explain your concerns. If you still believe they are in violation, you may contact the Office of the Comptroller of the Currency, the federal regulator of credit card issuers, at 800-613-6743 or http://www.help withmybank.gov/.