New credit card law 'a step in right direction'

(Phoenix, Ariz. - March, 2010) Attorney General Terry Goddard recently advised consumers about recent changes in federal law that require credit card issuers to disclose more information to customers. These laws also affect how the credit cards are marketed, advertised and managed.

Last year, Congress passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which gives consumers additional protections from abusive practices. With the new law in place, it is still important for credit card holders to familiarize themselves with the fine print in their contracts as well as review new provisions set forth by the CARD Act.

“In difficult economic times, credit card debt can mount and carve away at family finances,” said Goddard. “Even though the new law is a step in the right direction to protect consumers, card holders still
should read the fine print in their contracts.”

Below are a few of the new credit card regulations and protections in the CARD Act:

● Age 21 and Older Requirement - Card companies are no longer allowed to issue a credit card to people under 21 unless they can provide the means to repay the debt or have an adult over 21 co-sign on the account. Additionally, card issuers cannot provide tangible gifts to students on campuses in exchange for applying for credit.
● Exceeding Credit Card Limits - In the past, if you exceeded your approved spending limit, you would not be contacted by the credit card companies, which usually resulted in additional fees to your monthly statement without your knowledge. Now, no over-the-limit fees may be charged unless the consumer has given permission for over-the-limit transactions.
● Required Notice for Interest Rate Changes - Card issuers must give card holders 45-day advance notice in the event of an interest rate change.
● Cardholder Opt-Out - If there are significant changes made to the terms of the account, credit card holders can choose to reject those changes and will have five years to pay off the balance under the
original terms.
● Bill Due Dates - Monthly statements must now be mailed or delivered 21 days prior to the due date. Companies were moving up due dates which led to increased late fees. The new requirement should help to eliminate this practice.
● Minimum Payment Disclosure - Card issuers must now disclose in their monthly statements to customers how long it will take the card holder to pay off the bill if only the minimum monthly payment is made.  Issuers must also disclose how much the card holder would need to pay every month to pay off the balance in 36 months.
● Double-Billing Cycles Eliminated - Credit card companies can no longer employ two-cycle or double billing when calculating finance charges. A creditor cannot reach back to the previous billing period
and consider that cycle’s balance when calculating the amount of interest charged in the current cycle.

The Arizona Attorney General’s Office encourages everyone to visit the AG website, http://www.azag.gov/consumer, for tips about making smarter decisions in the marketplace, at school and at home. You may also visit creditcards.com to view the comprehensive breakdown of the Credit CARD Act of 2009.