Don’t Let Credit Card Issuers Take Advantage of You! Know the Rules…
Know the current law and ensure your credit card issuers are in compliance.
Current laws such as the Credit Card Responsibility Act, mandate that creditors comply with strict rules regarding the processing of payments, allocation of payments, assessment of fees, and the increase of interest rates.
• When a payment due date falls on a holiday or weekend, that payment must be considered on time when it is received on the first business day after the weekend or holiday.
• Billing statements must be sent at least 21 days before the payment due date.
• As of July 1, 2010, institutions are prohibited from charging overdraft fees for ATM and one-time debit card transactions unless the cardholder specifically “opts in” for overdraft protection.
• Payments in excess of the minimum payment must be applied to the highest-interest rate balances on your account.
• Except for payments made over the phone less than two days before the due date, no fees may be charged for making payments online, by mail, or over the phone.
• As of August 22, 2010, institutions are not allowed to charge more than $25 for late payments unless one of your last six payments was late, in which case the institution can charge up to a $35 late fee. Also, the late fee may not exceed the amount of the minimum late payment. For example, if your minimum payment due is $20 and you pay it late, the institution may not chage more than $20 in late fees. However, the institution may be able to charge a higher fee if it can demonstrate that it actually incurred greater losses as a result of the last payment.
• Multiple fees for single late payments are prohibited.
• If a cardholder “opts in” to over-the-limit protection, he may only be charged one penalty fee for exceeding his credit limit in a given billing cycle.
• Cardholders cannot be charged an over-the-limit fee as a result of a hold on your credit limit.
• Credit card interest rates may not be increased during the first 12 months of opening a credit line unless such rate increases were disclosed when the cardholder opened the account.
• Promotional rates must last at least 6 months.
• Creditors must give at least 45 days notice before increasing a cardholder’s interest rates.
• Increased interest rates must be reviewed and lowered if the review shows improved payment habits.
• Creditors are required to re-evaluate interest rate increases adopted since the start of 2009 and to reduce rates when appropriate.
It is also important to know that these rules may not apply to business/corporate credit cards. Furthermore, there are loopholes and exceptions that exist for credit card issuers. For example, although credit card issuers are generally prohibited from increasing a cardholder’s interest rates during the first 12 months of the account, they may increase the rate if the cardholder makes a late payment or becomes delinquent on payments altogether.
Know the law and use it to protect your credit and preserve your money. This list of rules and regulations is certainly not exhaustive, and you should contact an attorney at THE JACOBS LAW, LLC if you feel you have encountered a credit card company or financial institution that is failing to comply with the law.
The Jacobs Law, LLC
101 Tremont Street, Suite 712
Boston, MA 02108