More New Credit Card Laws Protect Consumers

Banks must play by new rules when they raise rates or charge fees

Updated Aug. 22, 2010

Are you using your credit card on a vacation? About to break out the plastic for back-to-school supplies? Paying for that fall wardrobe with a charge card? There’s more good news for you.

Several important credit card rules are now in effect. These new laws protect you more when it comes to fees and interest rate increases. Here is a summary of five key parts of the law:

1. Smaller late fees

Your credit card company cannot charge you a late fee of more than $25 or the cost of your minimum payment, whichever is lower.

• Exception: If one of your last six payments was late, the company can charge you $35. In some unusual cases, they can charge even more.

2. No inactivity fees

Your credit card company cannot charge you a fee for inactivity, such as not using your card or closing your account.

3. One mistake = one fee

Your credit card company can only charge you one fee for each bad transaction.

• Example: If you pay late once, the bank can only charge you one fee. They cannot add extra fees on top of the late fee.

4. Tell me why my interest rate went up

If your credit card company raises your Annual Percentage Rate, they must tell you why.

5. You raised my rate. Now please reconsider it

If your credit card company raises your Annual Percentage Rate, they must reevaluate your rate after six months. If it’s appropriate after that time, they must lower your rate within 45 days.

These new laws went into effect Aug. 22, 2010 are part of the Federal CARD Act. Several other new rules went into effect last year and earlier this year.

Call us at (800) 593-8222 for questions and concerns about your credit or any consumer-related needs.

Some information courtesy of the Federal Reserve Bank and the California District Attorney’s Association.