Retirement Planning Blog

There is good news for all the credit card users. The Credit Card Accountability Responsibility and Disclosure Act has provided a breathing space to the credit card users by eliminating issues like sudden rate hikes, double-cycle billing and overlimit charges.

According to the new law, interest rates cannot be increased in the first 12 months. The rates can be increased only in case of new charges. The application and annual charges cannot be more than 25% of the opening credit line. The credit issuers cannot charge interest rates on the current and past bills. This means the users are relieved of double-cycle billing process.

The credit card companies cannot impose overlimit fees without the consent of the card holder. The promotional rates can be availed for at least 6 months. If the customer is making bill payment over phone or online in advance, he doesn’t need to pay any fees for that.

The companies need to notify customers 45 days in advance in case of pending rate or an increase in fees. The Act has barred rate hikes on balances. It is not in favor of retroactive rate hikes due to delayed payments.

Considerable changes can be noticed in the realm of billing statements, disclosures and payments too. The credit issuing companies need to dispatch billing statements 21 days in advance. The due date of the bills should not change from one month to another. If the payments reach the concerned company by 5 pm on the last day of the bill, it will be treated as on-time payment. The billing statement should contain details on the scenario of full and minimum payments including interest rates.

There will be a warning in the statements saying minimum payments calls for high interest rates, which in turn increases pressure on debt payment. The statements will contain a toll-free number enabling you to avail credit-counseling service.

You are saved from the trap of late-fees also. The credit card companies will have to give customers minimum 21 days from the day mail has been sent to them. It thus eliminates the issues of due dates and weekend deadlines that affect the monthly and mid-term deadlines.

Also, the credit card companies have been restricted from issuing cards to the college students. Issuer cannot increase credit-limit if the user is less than 21 years and have a cosignatory.