Understanding New Federal Laws And Regulations For Credit Card Companies

The new credit card laws and regulations were put in place to prevent banks from continuing their methods that tended to put their borrowers deeper into debt than necessary. Many new changes that are put into effect will significantly help consumers, and in effect, the economy. One of the first changes deals with the interest rates. Previously, credit card companies were allowed to change the interest rate at any time even if it was not stated on the credit application. With the new regulations, rates cannot be raised on an account during the first year. The only exception to this rule is that it can be changed if a pre-designated introductory rate has reached its end. After the first year, the company must give at least 45 days notice of any changes. In the case of existing balances, rates are not allowed to be raised until payment is at least 2 months late. If the borrower pays timely for six consecutive months after that, the original rate is restored.

Another change being made concerns the service fees and other fine print. Before the laws and regulations were set in place, credit card companies could charge as much as they liked for any fee they could create. Now, service fees cannot exceed 25% of the credit limit. However, this only applies during the first year of use. Beyond the first year, there is no limit to the service fees charged. The fine print on credit applications was tedious, difficult, and often ignored in the past. The new laws demand that credit card companies give every card holder ease of accessibility to balance information. This includes how long it will take to pay off the entire balance by paying only the minimum, and what the monthly payment would be to pay it off in three years.

With more people depending on credit cards to make it month to month, many have reached their limit. Over-the-limit fees have been adjusted with the new laws and regulations. Now, cardholders must agree to transactions that will cause their balance to exceed their limit. This is the only case in which over-the-limit fees can be utilized. Over-the-limit fees cannot be brought on by interest charges or other fees issued by the credit card company. Also, only one over-the-limit fee can be charged during a billing cycle. Another aspect of credit cards that harmed people was the lack of a proper grace period. Credit card companies must now send out statements 21 days prior to the payment date without issuing fees or charges before that time is up. The new laws and regulations were created for consumer relief, so thoroughly review your card’s policies.