The Credit Card holder's Bill of Rights Act of 2009
The Credit Card holder's Bill of Rights Act of 2009
When credit cards were first introduced, a lot of greedy practices were witnessed, which affected consumers and credit card companies alike. And in May 2008, the Federal Reserve Board, Office of Thrift Supervision and National Credit Union Administration imposed rules that would end all unfair practices in the credit card industry. The new rules were not completely effective, and hence, they were later amended and renamed as the Credit CARD Act of 2009.
The CreditCARD Act, or the Credit Card Accountability Responsibility Disclosure Act of 2009, was signed by President Obama and has been made part of the Truth in Lending Act. Some of the highlights in the change of rules here would include:
Credit card issuers can no longer calculate finance charges using double billing method. This method caused credit holders to pay interest on balances that were previously paid.
From the time a credit card is opened, interest rates cannot increase during the first 12 months.
If there are any promotional rates, it should last up to 6 months.
Pre-existing balances cannot have an increase in interest rates. If there is a decision to increase the interest rates, it can be imposed only on the new balance and not the old one. However, there is an exception to this case. If you are more than 60 days late on your credit card payments, this rule can change.
Before increasing the interest rate, credit card issuers are liable to inform you with a 45-day advance notice. This also holds good for any major change in credit card agreements.
If you cannot make the minimum payment within 30 days of your due date, the interest rates can increase. However, there should be a 45-day advance notice if there is any increase in penalty rates.
Allocation of Payment & Fees
Payments above the minimum amount are subject to the highest interest rate.
If you are making the credit card payment online, there shall be no fees.
Payments are due on the same date of every month.
Over-the-Limit Fees
Unless requested, there cannot be any over-the-limit fees.
A credit card holder cannot receive more than one charge for exceeding the credit limit in one single billing cycle.
Unless there is an additional transaction which would place the balance over the limit, you cannot be charged with a credit limit fee. This rule holds good even when the balance remains over the limit in the next billing cycle.
A hold on your credit limit cannot cause over-the-limit fees.
Billing Statements & Processing of Payments
21 days before the due date, billing statements must reach you. This reduces the risk of late fees and penalties.
Mailed credit payments are on time if received by 5 pm on the due date.
Payments are on time if received by the next business day after a holiday or weekend.
Payments should be credited on the same day if made at a local branch.
If your account is never activated or used, or closed within 45 days, the new account can be removed from your credit report.
These rules have been effective since February 22, 2010. The amendment also aids in debt help services. These rules ensure that there should not be any unfair practices or ambiguities by which either one or both the parties suffer. The rules have been amended to protect the interest of both the parties - Debtor & Creditor.
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