Because of the Credit Card Accountability, Responsibility, and Disclosure Act, which went into effect in 2009, consumers in the United States have had much greater protection against possible abuses committed by credit card issuers. Because it mandates upfront pricing, you should no longer be subjected to a rate rise or a new cost without prior notice. This is because the regulation requires it. It is impossible to rearrange the date your payment is due at will. If the conditions are altered in a disagreeable manner, you are free to cancel the account without incurring any fees.
It's possible that everything said above is accurate, but there's more to the story than that. It is important for anybody who uses a credit card to be aware of the changes brought about by the CARD Act. The following summarizes some of the most important modifications broken down by category.
Interest Rate
Notification in Advance of Any Increases in Rates or Other Fees
Issuers of credit cards are now obliged to provide customers with written notice at least 45 days in advance of any rise in interest rates or other substantial changes, such as an increase in fees or finance charges. Credit card customers have a legal right to accept or reject the modifications and should be informed of this choice.
No Increases on Existing Balances
When a discounted interest rate offer has run its course: Whether you are thinking about applying for a new credit card that has a low introductory rate, you should examine the small print to see if it states that the rate on any current debt will be raised after the promotional rate expires. You should also find out what the new rate will be.
If the interest rate on your credit card is subject to change: Your interest rate on this kind of credit card will be calculated using a formula, such as the prime lending rate added to a certain percentage.
If the hardship program has been finished or terminated, the new interest rate cannot exceed the rate in effect when you began participating. In addition, before the beginning of the program, you had to have been informed of the interest rate that would apply if the program was either finished or canceled.
No Increases in New Accounts
If you create a new account for a credit card, the company that is issuing the card cannot increase your interest rate for the first year, except under the circumstances outlined above.
Increases Must Be Reviewed Biannually
After the interest rate on a credit card has been raised, the credit card issuer must review the account once every six months to see whether or not the rate may be dropped. If the conditions that originally caused the rise in the interest rate have been alleviated, the card issuer is obligated to reduce the interest rate.
Universal Default Is Banned
There was a phrase in credit card agreements known as "universal default," which gave credit card issuers the right to increase their customers' interest rates at any time and for any cause. For instance, certain issuers made advantage of this provision to assess the penalty rate if one of their clients was past due on a payment to one of their other credit cards. This technique is prohibited under the CARD Act.
Payments Rules
Must Be Processed the Day They're Received
On the due date, any payment received before 5 p.m. is deemed to be received on time. Your date of obligation for payment needs to be the same day every month. Your payment must be handled on the next business day to avoid incurring any late payment fees if the day on which it is due occurs on a holiday, the weekend, or any other day on which the card issuer is closed and does not take payments. Any payment received at a card issuer's local branch, if the card issuer allows payments there, must also be processed on the same day the payment was received.
Fairness in the Distribution of Extra Payments Should Be Obtained
Except in debt with deferred interest, payments that are more than the minimum should be applied to the balance that carries the highest interest rate first, followed by the amount that carries the next highest interest rate. If you have a debt subject to deferred interest, the full payment amount will be applied to that balance during the promotion's last two billing cycles.
