Time has Come

The Federal Reserve Board approved final rules that would better protect credit card users by prohibiting certain unfair acts or practices and improving the disclosures consumers receive in connection with credit card accounts and other revolving credit plans.

Unfortunately the timing of this new legislation is unclear.

Card issuers will be required to:

  • send statements at least 21 days prior to the payment due date
  • allocate payments exceeding the minimum payment to the balance with the highest rate first
  • not raise interest rates during the first year after account opening unless disclosed upfront or if the rate is variable
  • not increase the rate charged on pre-existing credit card balances
  • not use “two cycle” interest calculations
  • comply with limits on financing security deposits and fees for credit availability with regard to “sub-prime” cards

Disclosures must:

  • carry larger type and boldface type for key terms
  • disclose the duration that penalty rates may be in effect
  • simplify disclosures about variable rates and grace periods
  • increase the amount of advance notice before a changed term can be imposed from 15 to 45 days
  • disclose the effect of making only the minimum required payment on the time to repay balances
  • set a 5 p.m. due date cut-off time
  • consider a payment received on the next business day as timely when a due date falls on a weekend or holiday

For complete details on the new credit card rules click here.

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