Federal Reserve’s Credit Card Rules Review
Credit Card Rules Review
On February 22 of 2010 the Federal Reserve’s new credit card rules went into effect. These credit card rules benefit consumers in a variety of ways. Understanding these credit card rules is critical to sound financial decision making. I will highlight those credit card rules that are of interest. These credit card rules have withstood the test of time and are likely to remain a fixture of the consumer landscape for the foreseeable future.
CAUTION: Some of the sub-prime credit card companies are charging as much as 25 per cent of the increase as a fee to increase the credit limit.
Credit Card Rules Regarding Interest and Fees
- There must be 45 days notice before any interest rate increase.
- There must be 45 days notice before any increase in other fees such as cash advance, annual or late fees.
- When more than the minimum is paid the payment must be applied to the highest interest rate first.
- Interest can be charged only on balances in the current billing cycle. (no double cycle billing)
- Consumer has the option to cancel before the increased fees take effect.
- Interest rate cannot be increased for the first 12 months.
- Increased rates can only apply to new charges.
- Annual or application fees cannot total over 25 percent of the credit limit.
Credit Card Rules Regarding Over Limit Fees
- Over limit charges can be made only after the consumer opts in.
- The over limit opt in can be revoked at any time.
- Only one over limit fee per billing cycle is allowed.
Credit Card Rules Regarding Billing
- The bill must be mailed or delivered at least 21 days before the due date.
- The due date must remain the same every month.
- If the due date falls on a weekend or holiday it will advance to the following business day.
- The cut off for payment must be no earlier than 5 PM on the due date.
Credit Card Rules for Business Cards are Different
Business or commercial credit card rules are not covered by the Truth in Lending Act or the CARD Act. Credit Card Rules regarding business cards are not as protective of consumers. It is up to the holders to have a heightened awareness of the terms of their contracts. Some credit cards charge fees up to 25 percent of the new limit to raise the credit limit.