The new credit card rules of the Credit Card Act Of 2009 have come into effect on February 22, 2010. These new rules seek to bring about certain changes in the credit card industry and the guidelines under which it functions. The following are the main points and the changes that the new credit card rules seek to bring about.
No change in the credit card interest rate in the first year.
The creditor is not allowed to increase the interest rate on a credit card offers stay of the account. However the interest rate would increase into circumstances which are if the creditor disclosed a rate interest when you opened the account and if you do not make the minimum payment within 30 days of the due date.
No Interest Rate Increase on Pre-Existing Balances
The creditor is only allowed to apply the increased interest rate to the balances that you charge after the increase in the rate of interest. The increased rate of interest cannot be applied to older and existing balances.
Advance notice of 45 days for interest hike
Before these law creditors only needed to give you a 15 days’ notice to inform you of an interest rate increase and were not required to inform your tour of a penalty rate increase. The new laws require the creditors give the consumers and advance notice of 45 days along with an option to opt out of the interest rate.
No More Double Billing Cycle Calculation
The double billing cycle method of calculating financial charges could allow the credit card issuers to charge and interest on balances that you would rate. This method of calculation has not been made illegal by the Federal Reserve and the new credit card rules.
Limit on the Fee for Sub-Prime Credit Cards
Creditors can no longer charge fees up to hundred percent of the credit limit on the credit card. They are limited to 50% of the credit limit but only credit where percent of that can be charged an account is opened. The remaining amount has to be spread over at least five billing cycles.
The billing statements have to be sent 21 days before payment due date
The new laws require that the creditor send the credit card Bill at least 21 days before the payment is due. Earlier, the law stated that the billing statement should be sent within a “reasonable time”. Under the new credit card laws this reasonable time is clearly explained.
Payments received by 5 PM on the due date are considered to be on time.
Payment received the next working day after a weekend or a holiday is considered to be a time. If your billing due date is on a weekend or on a holiday on which the credit card issuer does not process or accept payments, then making the payment on the next working business day is still considered to be payment on time.
Payments above minimum applied to highest interest rate balances
Before the new credit card laws the practice was that most of the credit card issuers would apply any payment above minimum to the balance with the lowest much interest. This would enable them to run the maximum amount of interest as the balances with the highest interest would not get paid off to all the lower balances were dealt with first. The new credit card laws require that any payments that is above the minimum should be applied to the balance with the highest interest rate. This law saves you money that you pay in interest on the balances.
Billing statements to contained details About Revolving Balance
Whenever you revolve your balance on your credit card you will not be able to see how much it costs you and how much you pay in interest. The credit card companies are required to include the list of the months that it will take to pay off your balance with the minimum payment on the total interest that you’ll end up paying.