New Credit Card Rules are Now in Effect
On August 22, consumers gained more protections as new rules were put into effect under the Credit CARD Act of 2009. The best way to protect your credit is to use credit wisely by paying your bills on time and not exceeding your credit limit, yet the new rules now limit the amount consumers can be charged in fees when that is not possible.
Regulated Late Fees
- You cannot be charged more than $25 for a late fee regardless of what the minimum payment is on the account. There are two exceptions to this: (1) if one of your last six payments was late this could result in a late fee of up to $35 or (2) if your credit card company can prove the costs it incurs from late fees justifies a higher fee.
- You cannot be charged a larger late fee than the amount of your minimum payment. Therefore, if you are late with a minimum payment that is $20 you cannot be charged a late fee of more than $20.
Reduced Over-the-Limit Fees
- You cannot be charged a fee for exceeding your credit limit larger than the amount you went over. For example, if you exceeded the limit by $5, the fee can't be more than $5.
No Inactivity Fees
- Credit card companies can no longer charge you a fee for not using your credit card to make new purchases.
No Fee Bundling
- You cannot be charged more than one fee for a single transaction event such as a late payment or over-the-limit purchase.
Notification and Review of Account Changes
- If your credit card company increases your card's annual percentage rate it must tell you why.
- If you did get an increase, such as in response to late payments, the company must review the increase every six months. If appropriate action has been taken, such as you have proven you are now making your payments on time, it must reduce the rate within 45 days of completing the review.
Now that all the rules of the CARD act have been put into place, it is more important than ever to open your credit card statements as soon as they arrive to see what fees you may have been charged and read any material included in the bills about a change in terms.
