CARD Act Summary
On February 22, the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) will take effect. Below is a summary of the changes being put into place. This easy to follow guide explains the situation today (before the CARD Act), the changes going into effect on February 22, and the impact (if any) to our Credit Union cardholders.
1. Same Payment Due Date each month
Today: The payment due date can change each month. Your payment can be due on the 1st one month and on the 5th the next month.
After February 22nd: The payment due date on each statement will have to be the same day each month.
BCU Cardholders: BCU due dates fall on the 3rd, 12th, and 19th business day of the month. Starting February the new payment due dates will be the 1st, 13th and 22nd day of every month.
2. Limit on Fees Related to Payment Method
Today: Some credit card issuers charge a separate fee when a consumer makes a payment on an account through a non-automated method. This may include telephone, mail and/or the internet.
After February 22nd: Fees may only be assessed to consumers for an expedited payment service provided by an actual representative of the card issuer.
BCU Cardholders: Currently BCU charges a $20 fee for credit card payments made over the phone with the assistance of a Member Relations Representative. BCU does not charge a fee for mailing a payment or making a payment at a Service center. The new requirement does not impact BCU.
3. More Restrictions for Exceeding Credit Limits/Over Limit Fee
Today: Some credit card issuers charge an over-the-limit fee each time you exceed your credit limit.
After February 22nd: Before you can be charged an over limit fee, you'll need to "opt-in" or give your card issuer permission to complete transactions that will exceed your credit limit. If you opt in, you will be charged an over limit fee for exceeding your limit. If you do not opt in, you will not receive a fee for exceeding your limit, but the card issuer may decline any transaction that puts you over your credit limit.
BCU Cardholders: Members will need to opt in to authorize the credit union to approve transactions that exceed their credit limit, and agree to be assessed an over limit fee. The over limit fee will be charged only once per statement cycle.
4. Restriction on Increasing Interest Rates on Outstanding Balances
Today: Even when you've made all monthly payments on your account on time, some credit card issuers may increase interest rates on existing balances due to a change in your credit score, income or other factors.
After February 22nd: Card issuers generally won't be allowed to increase rates on existing balances except for variable rate cards or penalty rates when properly disclosed in advance.
BCU Cardholders: BCU does not change rates on existing balances or employ penalty rates.
5. Restriction on Increasing Interest Rates on Future Transactions
Today: Some credit cards offer low, introductory rates that can become dramatically higher over time. In addition, some card issuers have increased their rates for certain consumers without much warning.
After February 22nd: Rates can't be increased during the first year after your account is opened. After the first year, you'll have to be given at least 45 days' advance notice before your rate can be increased. If you do not agree to the rate increase, you may opt out of the change, close your account and pay down any remaining balance at your current rate.
BCU Cardholders: BCU will review credit card accounts each year. If a rate adjustment is required (due to a change in credit score, income, or other factors), BCU will provide a 45 day advance of the change prior to changing interest rates on credit cards. The notice will provide you with the required options.
6. Application of Payments
Today: For accounts with different interest rates, such as cash advances, purchases or balance transfers; your excess payments typically go toward paying off balances with the lowest interest rates first.
After February 22nd: Any payment made in excess of the minimum payment due must be applied to the balance with the highest interest rate.
BCU Cardholders: BCU currently applies excess payment amounts to promotional rates first, then oldest to newest balances. Beginning February 22, 2010, payments made in excess of the minimum payment will be applied to the highest interest rate.
7. More Information about Minimum Payments on Credit Card Statements
Today: Credit card statements only display the minimum required payment.
After February 22nd: Credit card statements will show how long it will take to pay off the balance making only minimum monthly payments, and will also show options for paying off balances in 36 months.
BCU Cardholders: BCU has redesigned our monthly credit card statements to comply with the new law. Cardholders will see these changes in February, 2010.