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New Credit Card Rules

There are more new credit protections for consumers. As of August 22, 2010, another group of new rules outlined by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act went into effect. For consumers who have credit card debt, these rules should help make it easier to repay debt without accumulating more debt as well as improve credit scores as long as they use their credit responsibly.

Some changes you can expect from your credit card company:

Reasonable Penalty Fees

Previously, penalty fees for late or missed payments or going over the credit limit were about $39. The new law limits late fees to $25 which can help people with credit restoration.

If you are late making the minimum payment your credit card your credit card company cannot charge you a fee of more than $25 except if:

  • One of your last six payments was late, in which case your fee may be up to $35; or
  • Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

Also, your credit card company cannot charge a late payment fee that is more than your minimum payment. Therefore, if your minimum payment is $30, your late payment fee can't be greater than $30. Likewise, if you go above your credit limit by $5, you can't be charged an over-the-limit fee of more than $5.

Explanation of Rate Increase

If your credit card company increases your card's Annual Percentage Rate (APR), it must tell you why. Your rate cannot go up within 12 months of opening an account with certain exceptions. Those exceptions include cards that have a variable interest rate, cards with an introductory rate, or accounts where the borrower's payment is more than 60 days late. If the rate does increase, the bank can only apply the higher rate to the existing balance if the rate went up because you paid late or because a promotional rate expired.

Reevaluate Higher Rates

If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.

Other Fee Protections

No inactivity fees. Your credit card company can't charge you inactivity fees, like a fee for not using your card.

One-fee limit. Your credit card company can't charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

This set of rules is the latest in a series of regulations that implement the Credit Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act). These rules are a welcome addition to those who are working on credit restoration.

Always remember to use your credit cards sensibly. If you wind out with late payments or maxed out credit cards it can seriously hurt your credit score. Learn how to improve credit scores with the Complete System to Repair Your Credit and Boost Your Credit Score. Download Now!