New rules now apply to the credit card industry. These new regulations fall under the credit CARD Act. This new credit card law is meant to reduce the risks to consumers. The CARD Act is now law. It mainly impacts the way that credit card companies can work with you and does not limit your usage of credit for the most part. This law has numerous elements that you should know about if you own credit cards or if you plan to do so in the near future.
The CARD Act Explained
The CARD Act, or the Credit Card Accountability Responsible and Disclosure Act makes several key changes to the way credit card companies can operate. Below are some of the changes that apply now.
- In order to raise your interest rate, the credit card company must give you 45 days worth of notice before doing so. This also allows you the opportunity to back out of the offer at this point, though you are still responsible for any debt incurred.
- If you are late on your account, the company cannot change your interest rate on an existing balance, unless you fall more than 60 days behind.
- The new law also increases the amount of time you have to have to pay your bill before it is due. You now must receive your statement at least 21 days in advance of the due dates. More so, any payment made up to 5 pm is considered on time.
- The company can no longer put in place a universal default, which would have occurred if you were late with another company. In the past, all companies could have increased your rate because of your bad track record with one company.
Perhaps the largest changes outside of interest rates applied to the use of credit by college students. The credit card law now restricts credit card use to those under the age of 21 unless they have a cosigner on the account or they are financial apply to repay the debt at the time of incurring it. It also limits the access credit card companies have to students on campus.
There are other credit card regulations you should know about including those regarding a federal credit union and other types of lenders. When it comes to making a payment, card industry requirements are not more manageable, the government hopes.
In short, a consumer is not able to count on learning when interest rate hikes will happen before they do. They also are protected from predatory lending practices. However, it is still important for the consumer to take the steps necessary to learn about his or her options before applying for a card. In addition, you are still responsible for making your own decisions about using credit.
