The final stage of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 went into effect August 22nd. Between the most recent rules and those implemented back in February, this is a major win for the American consumers who pay $15 billion annually in fees, according to the White House.
Beware Of New Card Offers
Credit card companies are likely to find ways around the rules put in place by the CARD Act. The newest ploy may be so-called “professional” cards, intended for small business owners and not covered under the new rules. Solicitations for these cards seem to have increased lately, and the application process has been streamlined to the point that you could find yourself opening one without realizing it’s a professional card. Credit card companies may charge fees and change rates freely with these cards, so be sure to read the application carefully next time you open a new card.
What do the newest rules from the CARD Act of 2009 mean for you? The Federal Reserve Board breaks it down and we translate here:
Rate Increase Rules
With the new rules, credit card companies cannot just raise your Annual Percentage Rate (APR)—they have to tell you why. Additionally, they will be required to re-evaluate the increase every six months. If you qualify for a reduction in your APR at that time, they have to make the adjustment within 45 days.
No More Inactivity Fees
If you’ve kept your oldest credit card open as a way to build your credit history, but keep forgetting to actually take it out on the town to keep it active, you’re in luck. Credit card companies can no longer charge inactivity fees. It’s still a smart idea to use that old card from time to time, but at least you can’t be penalized for keeping it open.
Late Payment Penalties
In the past, late payment fees could be as high as $39, even if your monthly minimum payment was only $20. With the new rules, late payment penalties cannot exceed your minimum monthly payment and are capped at $25, unless you’re a repeat offender—they can charge up to $35 if you missed another payment in the last six months. Multiple penalties are also a thing of the past—credit card companies are now limited to one penalty fee per transaction, which means you won’t get hit with multiple fees because you accidentally missed a payment.
Even though the rules have changed, best credit card practices remain the same: Only charge what you can afford and pay the balance in full and on time every month.