10 new rules for credit cards
Since a large, taxpayer-bailed-out bank recently doubled the interest rate on my credit card without notice and tightened the fluctuating payment period to something like six hours, it seems highlights of the Credit Cardholders' Bill of Rights Act that President Obama signed into law the other week are worth sharing and spreading:
- Prohibits retroactive rate increases unless the cardholder is at least 60 days behind in paying the bill. If a person does fall behind and the rate on past buys is increased, lenders must restore the lower rate after six months if the cardholder has paid monthly bills on time.
- Requires lenders to post their credit card agreements on the Internet and customers must receive 45 days notice before interest rates are increased.
- Requires anyone younger than 21 to prove that they can repay the money before being given a card or have a parent or guardian promise to pay off their debt if they default.
- Prohibits over-the-limit fees unless a cardholder elects to be allowed to go over a limit.
- Requires lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made.
- Requires that gift cards remain valid for five years.
- Bans "pay-to-pay" fees, which are charged when someone pays the bill by phone or on the Internet.
- Requires banks to give customers a reasonable time, such as 21 days, to pay the bill before it is considered late. Due dates must be the same date every month.
- Requires banks to give customers 45 days' notice before raising interest rates on new purchases, even if the customer is late or delinquent in paying the account.
- Prohibits retroactive rate increases. Does not include a provision that would require lenders to reduce the rate after six months if the person pays on time. Also would prohibit double-cycle billing.