Federal Credit Card Law begins TODAY – 2/22/10

I’m sure that you’ve been hearing LOTS about the new Credit Card Law that officially goes into effect today after a L-O-N-G wait. I don’t know about you, but my credit card company tried to do everything in it’s power to position itself IN ADVANCE, to get the MOST out of it’s customers (not good). Why? Well, from this point forward the rules that THEY have to play by are a lot more strict.

No longer can they just charge you as they see fit. It’s gotten a lot more difficult for them to raise interest rates, restrict the amount of over-the-limit and other fees credit card issuers may assess, etc. As a matter of fact, they have to arm YOU with more information about the cost of making only minimum payments on each bill.

According to the California Society of CPAs there are some STRATEGIES that you should be taking into consideration…..


Step 1: Watch interest rates

The new rules will make it harder for credit card companies to raise a customer’s rates across the board. Under the so-called universal default practice, a consumer who was late on a payment for one credit card might have seen the interest rate rise on that card and another, unrelated credit card.

Step 2: Be aware that interest rate hikes are going away using the first year an account is open and on existing balances.


But card companies will still be able to raise interest rates in some cases, such as when you are more than 60 days late paying your bill or an introductory rate expires after six months.

Another huge exception: Issuers can raise your rate before the first 12 months is up if your rate is a variable one tied to an index and that index rises. These indexes are at historic lows, but when rates begin to rise to keep inflation at bay, so will your payments.


Step 3: Watch over-limit fees

Another major change involves the fee charged when a consumer charges more than his or her credit limit. Until now, many card companies have allowed consumers to continue charging beyond set limits, tacking on sometimes hefty over-the-limit fees in the process.

Cardholders will now have to “opt-in” for over-the-limit spending. Those who do not face having their card declined should they try to top their spending limit.


Step 4: Many consumers under age 21 will no longer be able to get credit cards. Exceptions will be made for young adults with older co-signers or younger people able to prove they can pay the bills.


Step 5: New information becomes available to consumers. As of Feb. 22, credit card statements will have to show how long it will take to pay off a credit card if only minimum payments are made. The statements also will have to show how a consumer may pay off the entire bill in 36 months if payments are increased.

Credit card statements also will come with more information about various fees the consumer risks incurring if payments are late, and information about how to obtain credit counseling.


Step 5: Note changes to the way consumers pay down balances. With the new rules, card issuers have to apply payments to the part of a bill with the higher interest rate.

For example, if an account has a $5,000 balance with a regular rate of 15 percent, and a $5,000 balance at a promotional rate of 5 percent, the monthly payment must be applied first to the balance with the 15 percent rate.


Step 6: Watch the new change to the fee charged when a consumer charges more than his or her credit limit.

Until now, many card companies have allowed consumers to continue charging beyond set limits, tacking on sometimes hefty over-the-limit fees in the process. Cardholders will now have to “opt-in” for over-the-limit spending. Those who do not face having their card declined should they try to top their spending limit.

Step 7: Check out the FDIC’s Web site on the new law to help educate yourself:

Check out the California Society of CPAs. They have created a free Web site of articles, tools and resources to help consumers. These resources can be accessed by going to: “Dollars and Sense”