The changes are part of the Credit Card Act of 2009, signed into law last May. Congress approved the legislation to end what consumer groups have called unfair and deceptive business practices. But critics say the heavier regulations will make credit cards more costly for everyone.
Here are some of the key provisions:
- Interest Rates: Card issuers cannot increase interest rates during the first year on new accounts. In most cases, retroactive rate increases are prohibited.
- Payments and Billing: The issuer has to set the payment-due deadline on the same day each month.
- Fees: Consumers cannot be charged extra fees for making payments online, by phone or by mail.
- Disclosures: Issuers must notify card holders of significant changes to their account terms at least 45 days before the changes take effect. If the consumer objects to the changes, he or she can close the account, or “opt out.”
- Young People: Consumers younger than 21 need an adult co-signer to open a credit card. In addition, the card issuers cannot entice students to sign up by offering free pizzas or other gifts within 1,000 feet of a college campus.
Today our credit ratings affect more than we ever dreamed they would. Rates we pay for insurance can be lower or higher, even our prospective employers are interested in our credit ratings and scores.
The jury is still out on whether the Credit Card Act of 2009 will save us money or cost us more.