Credit Card Accountability Responsibility and Disclosure Act of 2009

Credit Cardholder’s Bill of Rights. What Impact Could it have on you?

The CARD Act’s effective date is fast approaching and issuers are scrambling to change credit card terms. As a responsible cardholder, keep up with any changes to your card policy so your credit score doesn’t get punished for any maxed out credit cards, cut credit limits, or closed accounts.

Take a close look at any notifications in the mail from your issuer, and if you are in good standing with them, call your issuer and dispute the changes to your cards’ terms and conditions.

Until the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, takes effect Feb. 22, you're vulnerable to interest rate hikes that could apply to an existing balance.

A lower balance also could help cushion your credit score against credit limit reductions. Know all about the CARD Act right here right now!

1. Finance Charge and interest rate increase

So what does the CARD Act say about the increase in the interest rates and finance charges on your credit cards

• No interest rate increases during the first 12 months of opening a credit card, unless the rate increase was disclosed when you first opened the credit card.

• No interest rate increases on pre-existing balances. If your credit card issuer decides to increase your interest rate, that new rate would only apply to new balances. Your current balance would continue to be subject to the old interest rate. There's an exception, however, if you become more than 60 days late on your credit card payments.

• Credit card companies will be required to provide consumers with a minimum 45 day advance notice of any interest rate change or significant contract change. Variable rates based on an index are excluded from this notification requirement.

• Your interest rate could increase if you don't make the minimum payment within 30 days of your due date, even during the first 12 months of opening your account. You must receive a 45-day advanced notice of penalty rate increases.

 • Not only will your payments be due on the same day each month, but credit card companies must mail billing statements no later than 21 days before the due date.

• Increased rates must be reviewed and lowered if the review shows changes. Credit card issuers could no longer raise your rate to the default rate and leave it there even though you've improved your payment habits.

 • Promotional rates must last at least 6 months.

2. Payment Fees and Allocation

• Payments made by a cardholder by 5 P.M. EST on the due date will be considered an on- time payment. In addition, credit card companies can no longer charge a fee for telephone and web-based payments, except in the case of expedited payments on the due date or the day before the due date.

• No fees to make your credit card payment online, by mail, or over the phone, unless you make a last-minute payment over the phone and your bill is due the same day or next day.

• Payments above the minimum must be applied to highest-interest rate balances. If you have balances with different interest rates, the new rules require banks to allocate anything over the minimum payment to your highest interest rate balance. This reduces the amount of finance charges you pay on balances.

3. Over-the-Limit Charges

• Under the CARD Act, issuers can't charge over limit fees for transactions that exceed the limit unless cardholders have opted in to go over their limit. Opting in means you would pay a fee if your balance climbs above the limit. If you don't breach the limit, you don't pay a fee. If you don't opt in you won't pay a fee either, but you might see you’re over limit transactions declined.

• Only one over-the-limit fee is allowed per billing cycle. You cannot receive more than one charge for exceeding your credit limit in any billing cycle

• No over-the-limit fees caused by a hold on your credit limit. If a transaction, like a car rental, puts a hold on your credit limit, thereby reducing your available credit, a subsequent charge cannot put you over the limit.

4. Payment Processing norms and Credit Card Billing Statement

• Payments are on time when received the next business day after a holiday or weekend (when the credit card company doesn't accept payment on those days). If your due date falls on a weekend and your card issuer receives your payment on the following Monday, your payment would still be considered on time. The same thing applies to due dates that fall on holidays

• Payments made at a local branch should be credited the same day.

• Removal of new accounts from your credit report if you never activate or use the account, or you close it within 45 days

Additionally,

• Rules regarding credit card applicants under 21 will change dramatically. Credit card companies will no longer be able to extend prescreen offers to people under 21, nor can they provide tangible gifts to students on college campuses in exchange for filling out a credit card application. Before a credit card company can issue a credit card to a person under 21, the company will have to obtain the signature of a co-signer over 21 or information indicating an independent means of repaying any credit extended. Even when an under 21 year old applicant presents means of repaying credit, the aggregate amount of credit extended from all of the credit cards will be limited to 30% of the student’s annual gross income from the previous calendar year.  

• Promoting greater transparency, credit card companies will have to disclose the period of time it will take and total interest a consumer will pay in order to pay off a balance if only minimum monthly payments are made. Lastly, credit card companies must post their written credit card agreements on the Internet.  

One CARD Act provision requires that issuers not increase credit limits unless "the card issuer considers the ability of the consumer to make the required minimum payments" under the account terms.

That means it could be harder to qualify for credit limit increases. Consider asking for higher limits now while they're easier to get. The idea isn't to take on more debt but to increase your available credit and lower your ratio of debt-to-available credit, and boost your credit score. A higher score will help you qualify for better loan terms.

Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.

To Read More Click Here Credit Report Repair