How the Credit Card Debt Relief Act Affects Consumers
The credit card industry experienced dramatic reform in 2010 with an act that presented new rules for creditors on payments, interest rates, fees, billing, and even gift cards. Most of the new rules are geared toward protecting the average American consumer.
Credit Card Debt Relief Act Changes to Minimum Payments
Bills now must show how long it will take the cardholder to pay off the balance via minimum payments. This will help consumers create a plan for debt relief by discouraging big charges to the credit card, while encouraging them to pay more than the minimum payment each month.
Credit Card Debt Relief Act Changes to Interest Rates and Fees
Companies will now have to print warnings about interest hikes for late payments. None of those interest rate increases can occur for the first year. Increases in interest will only apply to charges made after the rate was changed, and payments will go toward the balance with the highest amount of interest.
Consumers are notified 45 days before a creditor can raise interest rates or fees on the card. Fees are also capped at 25% of the credit limit, and credit card companies also must receive approval from the consumer before they allow an over-the-limit charge.
How the Credit Card Debt Relief Act Affects Billing
Card companies are no longer allowed to do any double billing cycles, so interest can only be imposed in the current billing cycle. Payments made on holidays or weekends will be allowed one business day to process before applying penalties or interest hikes. Bills must also reach the consumer 21 days before the payment is due.
Changes to Gift Cards in the Credit Card Debt Relief Act
Gift cards can no longer expire any sooner than five years after they are first issued. Issuers can only charge a single fee per month, but the act doesn’t limit how much that fee can be. Dormancy fees can only be charged if the card is unused for a year or longer.
How the Credit Card Debt Relief Act Effects Young People
Those under the age 21 cannot register for credit cards without a qualified co-signer. Credit card companies can no longer sell on college campuses.