The Credit CARD Act defines rules about what your credit card company must tell you. Here is a summary of key aspects of this law:

Advance Notice

Your credit card company must send you a notice 45 days before they can make major changes to the terms of your card.  This includes interest rates and fees. If your credit card company is plans to make changes, it must give you the option to cancel the card before fee increases take effect.

Months to Pay Off Balance

Your monthly credit card bill will include info on how long it will take you to pay off your balance if you only make minimum payments.  It will also tell you how much you would need to pay each month in order to pay off your balance in three years.

Late Payment Warning

Creditors must state their policy on late payments.  For example, “If we do not receive your minimum payment by the date listed above, you may have to pay a $39 late fee and your interest rate may be increased up to the penalty APR of 28.99%.”

Minimum Payment Warning

Creditors must disclose the impact of making only minimum monthly payments. For example, “If you make only the minimum payment each period, you will pay more in interest. It will take you longer to pay off your balance.”

No Interest Rate Increases in First Year

Your credit card company can’t increase your interest rate for the first 12 months.  There are a few exceptions to this provision.

Increased Rates Apply Only to New Charges

If your credit card company raises your interest rate, the new rate only applies to charges after the rate changes.  If you have an existing balance, your old interest rate will apply to that amount.

Over-the-Limit Transactions

Charges that would take you over your limit may be turned down. You have to ask your credit card company to allow you to go over the limit.

Caps On High-Fee Cards

Credit card fees cannot total more than 25% of the initial credit limit.  For example, if your credit limit is $500, the fees for the first year cannot be more than $125.  This limit does not apply to penalties like late payments.

Protections for Younger Consumers

If you’re under 21 years of age, you need to show you can make payments in order to get a credit card.  If not, you’ll need a co-signer to get one.  If you have a card with a co-signer, you can’t increase your credit limit unless they agree to the increase in writing.

Payment Dates and Times

Your credit card company must you your bill at least 21 days before it is due. Your due date must be the same date each month. The cut-off time can’t be earlier than 5 p.m. on the due date.  If your payment due date is on a weekend or holiday, you will have until the next business day to pay.

Payments Directed to Highest Interest Balances First

Some people have more than one account with the same credit card company.  If you make more than the minimum payment, your credit card company must apply the extra amount to the balance with the highest interest rate.

Source – Federal Reserve

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