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What the New Credit Card Rules Mean for You

May 20, 2009

You’ll see a lot of news stories today about the credit card bill just passed by the U.S. Senate. Here are the changes you’ll actually see in your statements, assuming it becomes law.

Photo by Brett L..

The Senate credit card bill passed today should curb some of the uglier fees charged by the banks that issue them. In a nutshell, the bill would provide more upfront disclosures about how consumers would be charged, and then restrict how card companies could alter fees and interest rates after a customer has signed up for a card. Here’s a summary of the bill’s measures:

•Interest rates can’t be raised during the first year of an account
•Customers will be notified 45 days in advance of any change in interest rates
•Bills can be paid online or over the phone without incurring a processing fee
•Customers must be over 60 days late on payments before their interest rate can be raised on balances; if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
•Overlimit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway
•If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first
•Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card
•Credit card statements must be mailed out 21 days before they’re due
•Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own
•Credit card agreements will have to be posted on the internet

The banking industry, however, is unhappy with some of the provisions and warns that cards will become harder to get and carry higher interest rates.

The bill will go to President Obama for signing after a compromise bill is hashed out with the House, which passed a slightly different bill in late April. The provisions could go into effect nine months after Obama signs off.

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