Home Members Tools Credit Cards
   

  • Credit Card Rules Part 2 - Payments, Billing, Fees, and Restrictions

    This article is a continuation of credit card Rules Part 1. Here's a look at key changes you can expect when the new credit card rules take effect February 22, 2010.

    Rules about once-common practices that penalize cardholders who pay their bill on time
    Card issuers will be prohibited from charging interest on debt that is paid on time. The "double-cycle billing" practice penalizes cardholders for carrying a balance in past months even if they paid off their balance in the most recent months, and will no longer be allowed.

    Retroactive rate increases are banned - on existing balances on accounts in good standing - for reasons unrelated to the cardholder's behavior with that card. This practice is known as "universal default" and has been popular in recent times with a number of card issuers; in the end, the cardholder is essentially being punished by multiple issuers for a late payment to one issuer. Universal default will no longer be allowed.

    New rules regarding billing and how payments are directed
    Card issuers will be required to mail billing statements 21 calender days before the due date to give cardholders enough time to get their payments sent out in time, giving cardholders an extra week's notice to pay their credit card bill. Currently, card issuers only have to send statements out 14 days in advance of the due date.

    Payments received on the due date before 5 p.m. Eastern Standard Time will be considered to be timely. This prevents an issuer from requiring an early morning payment on the due date and calling your payment late because the mail comes in the afternoon. Cardholders will no longer have to keep track of odd due date times set by individual card issuers or figure out which time zone the issuer's payment processing center is in.

    The payment due date will be required fall on the same date each month. If the due date falls on a weekend or legal banking holiday, the due date will be pushed to the next business day after the normal due date. So, say your payment is due on the 15th - which happens to fall on a Sunday in a particular month. The next business day, the 16th, will then be the due date for that month and will be considered "on time" as long as it received by 5 p.m. EST.

    Card card issuers are prohibited from charging late fees on a payment when a cardholder presents proof of mailing his or her payment within 7 days of the due date. To "present proof," the cardholder would need to send their payment by certified mail and get a receipt at the post office, or if using online bill-pay with their bank or credit union, print off a transactions statement.

    Payments made in excess of the minimum payment will be applied to the highest interest balance first. For example, say there's a $20 minimum payment and the cardholder has a $500 purchases balance and a $500 cash advance balance. If the cardholder makes a $200 payment, the extra $180 will be applied to the cash advance balance since it carries a higher interest rate.

    There is an exception to rule "highest balance first" rule
    If you made a purchase under a deferred interest plan (for example, "no interest if paid in full by March, 2012"), the credit card company may let you choose to apply extra amounts to the deferred interest balance before other balances. Otherwise, for two billing cycles prior to the end of the deferred interest period, the credit card company must apply your entire payment to the deferred interest rate balance first.

    Restrictions on fees for sub-prime cards
    If your credit card company requires you to pay fees (such as an annual fee or application fee), those fees cannot total more than 25% of the initial credit limit. For example, if your initial credit limit is $500, the fees for the first year cannot be more than $125. This limit does not apply to penalty fees, such as penalties for late payments.

    Restrictions on credit cards for underage consumers
    To obtain a credit card, consumers under the age of 21 will be required to prove that they have income to support repayment, or they will have to have a co-signer. Credit limit increases will be handled the same; the cardholder will need to provide income documentation or get the approval, in writing, of their co-signer to get a higher credit limit.

    Restrictions fees on "over the limit" transactions
    You must tell your credit card company that you want it to allow transactions that will take you over your credit limit. Otherwise, if a transaction would take you over your limit, it may be turned down. If you do not opt-in to over-the-limit transactions and your credit card company allows one to go through, it cannot charge you an over-the-limit fee.

    If you opt-in to allowing transactions that take you over your credit limit, your credit card company can impose only one fee per billing cycle. You can revoke your opt-in at any time.


    Source:
    Federal Reserve Board
  • Disclaimer

    Information in these articles is brought to you by Finance Globe. Banks, issuers, credit card, and other companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles and is further subject to our terms and conditions.
  • Recent Headlines and Articles

    ChrisB

    Car Loan Questions: Whatís on your Mind?

    It does not matter if you are buying a new or used vehicle, you have two options when it comes to finalizing the transaction. Make the purchase in full with cash, or opt for a car loan that you can payoff... read more
    ChrisB October 30th, 2014, 09:07 AM
    ChrisB

    What are your Retirement Goals? You Should Know the Answer

    Most people say they want to retire by a particular age, such as 62, and automatically assume that this is good enough. However, many realize after some time that they are not on track to do so.

    One of the best ways... read more
    ChrisB October 29th, 2014, 09:13 AM
    ChrisB

    3 Big Benefits of a Money Market Account

    Money market accounts are a popular choice among those who are looking to save money without taking any risk. From local financial institutions to online banks, opening one of these... read more
    ChrisB October 28th, 2014, 09:02 AM
    ChrisB

    3 529 Savings Plan Mistakes to Avoid

    With the cost of college on a rise, a growing number of parents are researching the pros and cons of a 529 savings plan. This allows you to save money for your childís college, all in an account that is not subject to federal income... read more
    ChrisB October 27th, 2014, 09:41 AM
    ChrisB

    Overlooked Benefits of Online Banking

    Many years ago, nobody would have given online banking a second thought. In todayís world, with so much advanced technology, this is something millions of people have fallen in love... read more
    ChrisB October 23rd, 2014, 09:20 AM
    ChrisB

    3 Alternatives to Traditional Retirement Saving

    When it comes to saving for retirement, you know one thing to be true: more is always better. While this may be the case, some people donít have enough time or earn enough money to reach their goals.
    ... read more
    ChrisB October 22nd, 2014, 09:27 AM
    ChrisB

    5 Ways to Save More for Retirement

    Is retirement age closing in on you in a hurry? Are you worried that you donít have enough money to hang up your work boots for good? If you find yourself in this position, you can take comfort in knowing that you are not alone.... read more
    ChrisB October 21st, 2014, 08:38 AM
    ChrisB

    The Cost of Upgrading your Companyís Technology

    As a small business owner, you likely understand the importance of technology. Some companies are ahead of the times, while others are lagging behind and looking for a way to catch up.

    If you feel that now... read more
    ChrisB October 20th, 2014, 09:53 AM
  • Recent Article Comments

    Wanderer

    What are your Retirement Goals? You Should Know the Answer

    As a retiree I can say finding ways to set aside money and survive life's many ups and downs is a... Go to last post

    Wanderer October 30th, 2014 03:37 AM

 

 

 

Credit Cards | Finance Social Network | Credit Card Reviews | Markets
About Us | FG on the Web | Sitemap | Privacy | Terms | Contact


Copyright © 2014 Finance Globe. All rights reserved.