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New credit card rules bring many changes
New credit card rules implemented this week offer new protections for consumers. If you have a credit card account, some of the key changes to watch for include the following.
What your credit card company has to tell you
When an increase in the rate or other fees is planned, a credit card company must send a notice 45 days before
| * | Increasing your interest rate; |
| * | Changing certain fees, such as annual fees, cash advance fees, and late fees, that apply to your account; or |
| * | Making other significant changes to the terms of your card. |
If the company is going to make changes to the terms of your card, it must give you the option to cancel the card before certain fee increases take effect.
The monthly bill will now include information on how long it will take to pay off the balance by only making minimum payments. It will also tell you how much you need to pay each month in order to pay it off in three years, and the total you would save by doing so.
New rules regarding rates, fees, and limits
A credit card company cannot increase the rate for the first 12 months after an account is opened. There are a few exceptions; such as if you are more than 60 days late in paying a bill, then the rate can go up.
Increased rates apply only to new charges. If a credit card company does raise the interest rate after the first year, the new rate will apply only to new charges made. If you have a balance, your old interest rate will apply to that balance.
Those under 21 years of age must now show proof of the ability to pay when applying for a credit card. Or, they will need a co-signer who must guarantee payment.
Changes to billing and payments
Your credit card company must mail or deliver your credit card bill at least 21 days before payment is due. The due date should be the same date each month. For example, the payment would always be due on the 15th or always due on the last day of the month.
If the payment due date is on a weekend or holiday, you will have until the following business day to pay.
While the new regulations offer some benefits for consumers, it is still the credit card holder's responsibility to read the fine print and to use credit wisely.
| * | Charge only what you can reasonably pay in full at the end of the billing cycle. |
| * | If carrying a balance, make more than the minimum payment to pay off the card as quickly as possible and hold down interest. |
| * | Pay bills early enough to ensure they arrive on time to avoid late fees and added interest. |
| * | Read credit card statements carefully and watch for changes in terms and charges. |
To learn more about these and other changes to your credit card accounts check out the Federal Reserve's new online publication, "What You Need to Know: New Credit Card Rules" at www.federalreserve.gov.
Editor's Note: Ann Ludlum is a K-State Research and Extension family and consumer sciences and 4-H extension agent assigned to Bourbon County. She may be reached at (620) 223-3720 or aludlum@ksu.edu.