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The key provisions of the Credit CARD act are as follows: Source: Office of Thrift Supervision – Department of the Treasury http://files.ots.treas.gov/25308.pdf

Provides Enhanced Disclosure of Card Terms and Conditions

• Requires issuers to provide cardholders with 45 days notice of annual percentage rate, and other significant changes (Effective August 20, 2009);
• Requires issuers to disclose changes in card terms that take effect upon renewal;
• Requires issuers to disclose the period of time and total interest that will be paid if a consumer repays a card balance by making only the minimum monthly payment;
• Requires full disclosure in billing statements of payment due dates and late payment penalties; and
• Prohibits the use of the term “fixed rate” unless the APR or interest rate will not vary for any reason over the period specified.

What does this mean for me? It means that card issuers must provide you with plenty of notice (45 days) before APR can be raised on your card or any other significant changes are made. It also mean that full disclosure of what the new terms or changes will mean and how long it will take you to fully pay off your account making the minimum payment only. This is an important feature to be aware of if your goal is to eliminate debt!

Requires Fairness in the Timing and Application of Card Payments

• Requires credit card statements to be mailed 21 days before the bill is due rather than the current 14 days to treat a payment as late or deny a grace period otherwise offered (Effective August 20, 2009);
• Prohibits issuers from setting early morning deadlines for credit card payments;
• Requires that credit card payment due dates be the same day each month;
• Requires that payment at local branches be credited on the same-day; and
• Except for deferred interest balances, requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest.

What does this mean for me? It means that it is now a law that you receive your credit card bill at least 21 days before it is due. It also eliminates the practice of setting due dates that include a specific hour of the day and then treating that payment as late if it is received after that hour. An important key provision of this law also requires that if you make any payment above the minimum due, the card issuer must apply that amount to the balance with the highest interest rate first instead of the lowest as was common practice previously. This will shorten the amount of time it takes you to pay off that debt!

Fosters Responsible Lending

• Requires issuers to consider a consumer’s ability to pay when issuing credit cards or increasing credit limits.

What this means for the average consumer is that it may be slightly more difficult to obtain credit as the card issuer will be taking your ability to repay into consideration with regard to your credit line. If you don’t have sufficient income to repay the debt, you may not get the card.

Restricts Certain Fees and Interest Charges

• Prohibits issuers from charging a fee to pay a credit card debt by mail, telephone, or electronic transfer, except for live services to make expedited payments;
• Prohibits issuers from charging over-limit fees unless cardholder has agreed to allow the issuer to complete over-limit transactions and restricts the manner in which over-limit fees may be assessed;
• Requires penalty fees to be reasonable and proportional to the omission or violation (Effective August 22, 2010);
• Prohibits applying excessive fees to the credit available on low-credit, high-fee credit cards; and
• Prohibits interest charges on debt paid on time (prohibits “double-cycle billing” and requires that when grace periods are offered, they must extend to partial payments).

With this set of provisions, the card issuer will only be allowed to charge you over the limit fees if you have authorized them to allow you to exceed your credit limit on purchases. This authorization may not necessarily be in writing, so be aware if you receive calls from your credit card company looking for your authorization to make changes to your account.

 Prevents Unfair Increases in Interest Rates and Changes in Terms

• Prohibits APR, fee, or finance charge increases during the first year an account is opened and subsequently on outstanding balances subject to limited exceptions that do not permit “universal default” or “any time/any reason” repricing;
• Requires a credit card issuer who increases a cardholder’s interest rate to periodically review and decrease the rate if indicated by the review (Effective August 22, 2010); and
• Requires promotional rates to generally last at least 6 months.

What does this mean for me? This may be good news for you! You can no longer receive random interest rate increases or other fees for the first year of your account being opened unless your account is in default (generally 60+ days late). It also means that if you were subject to a rate increase because of your payment history and have made consistent on-time payments since that point (at least 6 months) the card issuer will be required to review your account and decrease your penalty rate.

Strengthens Oversight of Credit Card Industry Practices

• Requires Federal Trade Commission to issue rules that prevent deceptive marketing of free credit reports; and
• Requires credit card issuers to post credit card agreements on the Internet and provide those agreements to the Federal Reserve Board to post on its website.

Because of this provision you will now be able to access your credit card agreement on the website of your card issuer should you have any questions or need that information. You will also be clearly notified in a disclosure if a “free credit report” offer is not in fact the government mandated free credit report that you are provided access to through www.annualcreditreport.com.

Enacts Safeguards for Young People Who Obtain Credit Cards

• Requires issuers extending credit to consumers under the age of 21 to obtain the signature of an individual 21 years or older who will take responsibility for the debt or proof that the applicant has an independent means of repaying any credit extended;
• Limits prescreened offers of credit to young consumers;
• Prohibits increasing a credit limit unless both the cardholder and other jointly liable individual agrees to the increase; and
• Increases protections for students against inducements to obtain a credit card, and increases transparency of affinity arrangements between credit card companies and universities.

This section of the law will eliminate marketing of credit cards to teens and young adults who do not have sufficient income to repay the debt. Individuals under 21 years of age will be required to show proof of income or have an adult co-signer to accept responsibility for the account.

Gift Card Protections (Effective August 22, 2010)

• Requires certain gift cards to have at least a five-year life span; and
• Eliminates the practice of declining values and hidden fees for gift cards not used within a reasonable period of time.

Those gift cards that you have missed out on because you forgot to use them? Now they will be required to remain valid for a minimum of 5 years after purchase and will no longer be subject to hidden fees when not used promptly. This is good news for those of us who are forgetful or hold onto their gift cards for a long time!
As you can see, there are many changes ahead for consumers holding credit card accounts. The key is to be aware of the changes that affect you and to remain informed about your rights as well as your responsibilities.