New Credit Card Rules
The Federal Reserve's new rules for credit card companies mean new credit card protections for you. Here are some key changes you should expect from your credit card company beginning on February 22, 2010:
What your credit card company has to tell you:
When they plan to increase your rate or other fees.
Your credit card company must send you a notice 45 days before they can:
- Increase your interest rate
- Change certain fees (such as annual fees, cash advance fees, and late fees) that apply to your account; or
- Make other significant changes to the terms of your card.
See rules regarding rates, fees, and limits
See how long it will take to pay off your balance
If your credit card company is going to make changes to the terms of your card, it must give you the option to cancel the card before certain fee increases take effect. If you take that option, however, your credit card company may close your account and increase your monthly payment, subject to certain limitations.
For example, they can require you to pay the balance off in five years, or they can double the percentage of your balance used to calculate your minimum payment (which will result in faster repayment than under the terms of your account).
The company does NOT have to send you a 45-day advance notice if
- you have a variable interest rate tied to an INDEX if the index goes up, the company does not have to provide notice before your rate goes up;
- your introductory rate expires and reverts to the previously disclosed "Go TO" rate;
- your rate increases because you are in a workout agreement and you haven’t made your payments as agreed.
How long it will take to pay off your balance.
Your monthly credit card bill will include information 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.
For example, suppose you owe $3,000 and your interest rate is 14.4%--your bill might look like this:
| New balance | $3,000.00 |
| Minimum payment due | $90.00 |
| Payment due date | 4/20/12 |
Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 late fee and your APRs may be increased up to the Penalty APR of 28.99%.
Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example:
| If you make no additional charges using this card and each month you pay: | You will pay off the balance shown on this statement in about: | And you will end up paying an estimated total of: |
|---|---|---|
| Only the minimum payment | 11 years | $4,745 |
| $103 | 3 years | $3,712 (Savings = $1,033) |