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How Will the New Credit Card Legislation Affect Me?

The Credit Card Accountability Responsibility and Disclosure (CARD) Act places parameters around the ways credit card companies can increase rates and fees and requires them to provide clearer language for cards’ terms and conditions. It also limits how companies issue credit cards to people under the age of 21. Most changes will take effect in early 2010.

So what does this mean for you? The answer: a lot of changes, some of which may be beneficial to you. It is important to understand how this legislation will affect you, and whether or not you should adjust your credit habits in response. Among the changes you should know about:

  • Card issuers are prohibited from raising interest rates on existing credit card balances, except for limited circumstances such as when your account is 60-days past due.
  • Cardmembers must be notified, in writing, at least 45 days before a significant account change, such as a rate and/or fee increase.
  • Card issuers can only charge overlimit fees if you have previously consented to the fee.
  • If your payment reaches the card company by 5 p.m. on the due date, it will be considered on time, and you cannot be charged a late fee.
  • If you are paying different rates on a card for different balances, any payments you make in excess of the minimum due will be generally applied first to your balance with the highest APR and then to other balances in decreasing order.
  • Card issuers may not issue a card to consumers under the age of 21 without ensuring the ability to pay or obtaining a co-signer over the age of 21 who has the ability to pay.

Be sure to always read all communications from your credit card company so that you are aware of changes that could affect your account. Call your credit card company’s toll-free number if you have any questions.

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