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| What CARD Act changes went into effect on August 20, 2009? |
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20th of October, 2009
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The first consumer protection provisions of the CARD Act went into effect August 20, 2009. Here is a summary of the new changes:
- Creditors must now provide written notice to consumers 45 days before the creditor increases an annual percentage rate on a credit card account or makes a significant change to the terms of a credit card account. This is up from the current 15-day advance written notice that is required. However, this notice is not required if you have an introductory rate that expired, your card carries a variable interest rate, or you were paying a reduced rate under a hardship or “workout” plan and you failed to make your payments according to that plan.
- Creditors must inform consumers in the same notice of their right to cancel the credit card account before the increase or change goes into effect. If a consumer does so, the creditor is generally prohibited from applying the increase or change to the account. In other words, if you don’t want the card under the new terms, you can cancel it and pay it off under the old terms. However, the card issuer can increase your minimum payment (as much as doubling it.)
- Creditors generally must mail or deliver periodic statements for credit cards and other open-end consumer credit accounts at least 21 days before payment is due. (Before, creditors had to send statements at least fourteen days before the due date.) Note: The rules that prohibit due date traps like floating due dates and due dates on weekends or holidays when payments aren’t accepted don’t go into effect until February 2010.
The Federal Reserve has published 107 pages detailing proposed rules to implement these changes. The proposed “final interim rules” are published in the Federal Register.
Read about the majority of the CARD Act provisions that go into effect on February 22, 2010.
For in-depth articles about the CARD Act, visit Credit.com’s Learning Center.
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