Starting Thursday, consumers will see the first phase of the Credit Card Accountability Responsibility and Disclosure Act of 2009. The bill’s strongest measures take effect next year. Experts from Credit.com, Credit Karma and the National Foundation for Credit Counseling provided a rundown of some key provisions of the law.
What’s taking effect now
*Card issuers must provide a 45-day written notice before raising interest rates or making any major change to account terms. Cardholders can decline a rate increase by closing the account, and they must be allowed to pay off the balance under the prior terms within five years — though the issuer can increase the minimum payment.
*Account statements must be mailed or delivered at least 21 days before payment is due, up from 14 days.
Among changes next year
*Issuers cannot increase the interest rate, fee or finance charge on an existing balance unless the rate was introductory, the card has an established variable rate or a temporary hardship payment arrangement was set up with the lender. If payment is 60 days late, the lender can raise your rate retroactively but must allow you to earn back your prior rate if minimum payments are made on time for six months.
*If an issuer raises the interest rate based on your credit risk or due to market conditions, they will be required to re-evaluate your credit profile every six months. If your profile has improved, they must reinstitute the old rate.
*Banks cannot charge an over-the-limit fee for a purchase unless you give them prior authorization to allow purchases that put your balance over your limit.
*Cardholders cannot be charged for payments made by telephone, electronic transfer or other means unless the payment requires expedited service.
*If different interest rates apply to the balance, any payment amount greater than the minimum must be applied first to the balance carrying the higher interest rate.
*Applicants under age 21 must have a co-signer or provide financial information demonstrating they have the independent ability to make payments.
