On May 22, the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD Act of 2009 was made into a law. In this article, let’s discuss the advantages that you can enjoy from the changes brought about by the New Credit Card Law.

No sudden rate increases. Gone are the days when Issuers can increase the current rate to penalize cardholders who fall behind their payments. Issuers cannot impose the Universal Default Clause.

The interest rate can increase only if the Variable Index Rate has changed, if the promotional rate has expired or if the cardholder has been late for 60 days or more.

In case the Issuer increased the rate due to a 60-day delinquency, there is another provision. The original rate must be restored if the cardholder can submit prompt payment for the next 6 months, consecutively.

In addition, the interest rate cannot be changed within the first year of the card’s issuance. Promotional rates must not be lower than the six month-period.

Longer advanced notice period. The rates on new balances can increase but Issuers must give a 45-day advanced notice. In the past years, cardholders are only given 15-day notice before the changes take effect.

Restrictions on other fees. Cardholders cannot be charged with more than one over-the-limit fee for each billing cycle. The new rules also don’t cap interest rates. Payments made through online or phone banking cannot be charged with an additional cost.
High-rate debts paid first. Whenever you submit payment, the Issuer must first apply it to your highest rate balances instead of the other way around. This reduces the risk of debt build-up since the high-rate debts are slashed off first.

More time to make payment. The old provision only gives a 14-day notice. The new law mandates all Issuers to send a billing statement at least 21 days prior to the due date.

Longer lifespan for gift cards. Gift cards must have at least 5-year expiration period. In addition, the Issuer cannot impose inactivity fees unless that card has not been used for more than 12 months.

Double-cycle billing is not allowed. A double-cycle billing means additional charges will be based upon your previous and current balance. Under the New Law, issuers are prohibited from charging interest on debts that have already been paid off.
Student credit card limits. Students under the age of 21 must have a co-signer, unless they can show proof of their own income. This change is meant to protect young people from getting themselves stuck in bad debt because of credit card mismanagement.

About the Author
Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving out Free Credit Repair and Building Ebook. NHBS also has a list of recommended Credit Cards for Bad Credit.
Copyright 2010.