Credit Card Act - What consumers should know - Credit Card Debt

With the new Credit Card Act in place what does this mean to consumers? Consumers may now see a return to annual credit card fees. Although the new Credit Card Law restricts certain fees, such as those charged for surpassing credit limits or paying credit cards late, it leaves many other charges as "fair game". We may start seeing credit card issuers preparing to implement additional fees. For instance, Fifth Third Bank last year began charging some cardholders $19 for not using their cards for 12 months. In addition, there is NO LIMIT to how high annual percentage rates can go.

Credit Card Debt

Although the new Credit Card Act heavily restricts rate hikes on consumers that have existing balances, it DOES NOT prohibit card issuers from raising consumer rates on future purchases. credit card act

Will this also be the end to fixed rate interest terms? Balance transfers from one credit card to another with lower interest rates or new credit card offers may now only go to select consumers. Will the consumers with poor credit face reduced credit limits and in turn have more difficulty acquiring credit? Will program benefits that now offer rewards be a thing of the past?

Other important highlights you should know about the new Credit Card Act are:

* Late payments before the 60 day window will not increase your interest rates, but it will still show up negatively on your credit report. * You should now open your credit card statements quickly and review them to keep abreast of new terms. * Some of the credit cards may have deadlines that you must meet in order to opt in or out of in order to get certain terms. * The new Credit Card Act does not cover Business and corporate credit cards. * The Act does not cap interest rates. The increased rate can still reach triple your existing APR. * A rate increase can't be applied to existing balances unless the cardholder is delinquent.

* Cardholders must be notified of a rate increase 45 days in advance, but there is no cap on rates. * Those under 21 can't apply for a credit card unless they have a co-signer, sufficient income or show proof that they have an independent means to repay the card debt themselves.

1. Retroactive rate increases

Credit Card companies cannot raise rates on an existing balance unless a promotional rate has expired, the variable indexed rate increased or you paid late by 60 days or more. No longer will they be able to punish borrowers for late payments on unrelated accounts under the practice of universal default or due to "anytime, any reason" clauses. If the cardholder does trigger the default rate because of a 60-day delinquency, the bank must restore the lower rate once the cardholder demonstrates six months of consecutive on-time payments.

2. More advance notice of rate hikes

Consumers will now get 45 days notice from the credit card companies before any key contract changes take effect, including rate increases. Under the current Truth in Lending Act, cardholders only receive a 15-day notification.