Consumer Credit
2010 Credit Card Regulations and How They Affect Accounts
Vicki A Benge
New credit card regulations that went into effect in February of 2010 require credit card companies to disclose pertinent information to consumers regarding any and all accounts. Part of the information shows up now on monthly statements which have a new look.
One interesting addition to the regular credit card statement is the section disclosing how long it will take to pay off the balance by making the required minimum payment only and what the regular monthly payment needs to be to pay off the balance in three years. Also, the amount of interest that can be saved by clearing the balance in three years, as opposed to paying only the minimum is clearly disclosed.
The results can be quite astounding for someone carrying a substantial credit card debt, with a high interest rate. (Remember the power of compounding, and this time it is benefiting the credit card issuer.)
Another prominent addition to the monthly statement is a bold-face lettering of the "late payment warning" indicating what late fee the consumer may be charged and what the Penalty APR (annual percentage rate) could increase to.
The Federal Reserve also requires credit card companies to give fair warning now before increasing rates and particular fees, such as late fees and membership fees, or making substantial changes in the contract terms. From the Federal Register , Vol. 75, No. 49 March 15, 2010, Proposed Rules: "The requirements of the Credit Card Act . . . (calls for) provisions generally requiring that consumers receive 45 days' advance notice of interest rate increases and significant changes in terms. . . ."
Other restrictions the Fed now requires of credit card companies are: -- a standardized payment date, (i.e. the same every month), -- over-the-limit restrictions, -- no increases in interest rates for the first year on all new accounts, barring late payments, and omitting introductory teaser rates; also if the interest rate is increased it can not be applied to previous balances that the consumer may be carrying from a prior month, -- payments must go to the balance with the highest interest rate first.
