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Major Credit Card Provisions - Consumer Protection

 

Protection of credit cardholders.  The CARD Act addresses:

  • Annual percentage rate changes.  The CARD Act would require that cardholders be given 45 days notice of interest rate and fee and finance charge increase, advance notice of any significant change in terms of the credit card account, and require clear notice of right to cancel credit card when the APR is raised or significant terms are changed;
  • Universal default and other increases.  The CARD Act would prohibit universal default on existing balances; prohibit rate, fee, or finance charge increases on existing balances other than for the expiration of an introductory rate; a change in variable rate, an increase due to the failure of the cardholder to comply with the terms of a workout agreement, or a 60-day late payment by the cardholder where the cardholder can “cure” with six months of on-time payments.  The CARD Act would prohibit issuers from accelerating payments after a rate increase beyond prescribed limits;
  • Reduction in APR.  The CARD Act would require a credit card issuer that increases a cardholder’s interest rate to periodically review and decrease the rate if indicated by the review; and

Initial rates for new cards.  The CARD Act would prohibit credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened and require promotional rates to last at least six months.
Exorbitant and unnecessary fees.  The CARD Act addresses:

·    Double-cycle billing.  The CARD Act would prohibit double-cycle billing and prohibit credit card issuers from imposing interest charges on any portion of a balance in the current billing cycle that is paid by the due date’
·    Overlimit fees.  The CARD Act would prohibit the charging of overlimit fees on a credit card account unless the consumer has expressly elected to permit the issuer to complete overlimit transactions on the account;
·    Other fees.  The CARD Act would prohibit credit card issuers from charging a fee to pay a credit card debt, whether by mail, telephone, electronic transfer, or otherwise, except for expedited service by a live service representative; and
·    Penalty fees.  The CARD Act would require penalty fees to be reasonable and proportional to the omission or violation. 

Application and timing of card payments.  The CARD Act would:

·   Require payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
·   Prohibit credit card companies from setting early morning deadlines for credit card payments; and
·         Require credit card statements to be mailed 21 days before the bill is due (the current requirement is 14 days).

Standards applicable to initial issuance of subprime or “fee harvester” cards.  If an issuer charges certain fees over 25 percent of the credit limit in the first year, the CARD Act would prohibit payment of those fees from the credit made available under the card.

Enhanced penalties.  The CARD Act would increase existing penalties for companies that violate the Truth in Lending Act for credit card customers.

Enhanced Consumer Disclosures

Payoff timing disclosures.  The CARD Act would require credit card issuers to:

·         Provide individual consumer account information to disclose the period of time and total interest it will take the cardholder to pay off the card balance if only minimum monthly payments;
·         Disclose the total amount of interest the cardholder will pay to pay off the card balance if only minimum monthly payments are made; and
·         Provide a toll-free number at which the consumer may receive information about accessing credit counseling and debt management services.

Requirements relating to late payment deadlines and penalties.  The CARD Act would require full disclosure in billing statements of required payment due dates and applicable late payment penalties.  Under the CARD Act, payments made at local branches must be credited same day. 

Renewal disclosures.  The CARD Act would require card issuers to provide account disclosures to consumers upon card renewal when the terms of the card have changed.

This just a small step. Yet major as you continue to pursue financial freedom. Alone with the other information that we will provide to you, you will accomplish your goal to improve your scores and begin the wealth building process.

 
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