Notes On Consumer Affairs
Last year, President Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act), which provides new protections to credit card users. As part of its implementation, the Federal Reserve Board has approved new rules for card issuers that went into effect on August 22, 2010. As a consumer, you should be aware of the protections these rules provide.
The new rules offer reforms in two main areas, fees and rate increases. Previously, if you were late making a monthly payment, your late payment fee could be as high as $39. You also would have paid the same amount in fees regardless of what your minimum payment was. Under the new rules, the card issuer cannot impose a late payment fee greater than your minimum payment, with a maximum of $25. Similarly, if you exceed your credit limit, the over-the-limit fee cannot be greater than the amount by which you exceeded your limit, with a maximum of $25. However, the maximum $25 fee does not apply if one of your last six payments was late or the issuer can prove that the costs it incurs because of the violation justify the higher fee. The rules also provide additional fee protections that prohibit card issuers from charging inactivity fees and levying more than one fee for a single late payment or other violation.
The rules also provide protections when card issuers increase your card’s yearly interest rate, known as the Annual Percentage Rate (APR). When your APR increases, the card issuer must tell you why. In addition, the issuer must re-evaluate the increase every six months to determine if the reasons for the increase have changed. If it is determined that the reasons no longer exist, the card company must reduce your rate within forty-five days of completing the evaluation. Not only does this rule apply to future rate increases, but card issuers must also re-evaluate rate increases that took effect after January 1, 2009.
Even with these new rules, it is important for consumers to manage credit wisely. Be sure to make payments in a timely fashion, as late payments will lower your credit score. In addition, carefully read your monthly statements and all other mailings and disclosures you receive from your card issuer.
For more information about these new rules, or about credit cards in general, you can contact the Federal Reserve Board by calling 202-452-3000 or visiting their website at http://www.federalreserve.gov/creditcard/. You can also contact the New York State Consumer Protection Board at 1-800-NYS- 1220 and 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/.