New Credit Card Rules

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This presentation provides information on credit cards and reflects new rules instituted by the federal government. Learn how to best protect your credit rating and understand your rights as a consumer.

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New Credit Card Rules

  1. 1. New Credit Card RulesWhat they Mean for You<br />Consumer Affairs Branch<br />Fairfax County Department of<br />Cable and Consumer Services<br />fairfaxcounty.gov/consumer<br />
  2. 2. fairfaxcounty.gov/consumer<br />Card Member Agreement<br />The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 provides consumer protections for credit cardholders. <br />Read your agreement, especially the fine print, to understand your rights, penalties, transaction fees, and to avoid unnecessary surprises. <br />
  3. 3. fairfaxcounty.gov/consumer<br />Card Member Agreement<br />Contract that spells out the terms and conditions of using a credit card.<br />Credit card issuers must post credit card agreements on their websites plus submit to the Federal Reserve System for posting at: www.federalreserve.gov/creditcardagreements<br />
  4. 4. fairfaxcounty.gov/consumer<br />Increase in Rate or Other Fees<br />Your credit card company must send you a notice 45 days before they can:<br /> Increase your interest rate. <br /> Change certain fees that apply to your account.<br />Annual fees<br />Cash advance fees<br />Late fees<br /> Make other significant changes to the terms of your card such as increase your minimum payment. <br />
  5. 5. fairfaxcounty.gov/consumer<br />Increase in Rate or Other Fees<br />Your credit card company doesn’t have to send a 45-day advance notice if:<br /> You have a variable interest rate tied to an index. If the index goes up, notice is not required before your rate goes up. <br /> Your introductory rate expires and reverts to “go-to” rate. <br /> If you are in a workout agreement, your rate will increase if you don’t make your payments as agreed. <br />
  6. 6. fairfaxcounty.gov/consumer<br />Interest Rate Increases<br />Your credit card company cannot increase your rate for the first 12 months after you open an account. There are some exceptions: <br />If your card has a variable interest rate tied to an index, your rate can go up whenever the index goes up. <br />If there is an introductory rate, it must be in place for at least 6 months. After that your rate can revert to the "go-to" rate that was disclosed when you got the card. <br />If you are more than 60 days late in paying your bill, your rate can go up. <br />If you are in a workout agreement and you don't make your payments as agreed, your rate will increase. <br />
  7. 7. fairfaxcounty.gov/consumer<br />Interest Rate Increases<br />If your credit card company raises your interest rate after the first year, the new rate will apply only to new charges you make. <br />If you have a balance, your old interest rate will apply to that balance. <br />Cardholders must be given the right to cancel or opt-out if they don’t accept the changes.<br />When you opt-out, your account will be closed and you may have up to five years to pay off the balance. <br />
  8. 8. fairfaxcounty.gov/consumer<br />Can They Do That?<br />Odessa heard that credit card companies could no longer make sudden changes to consumer accounts. When her bank reduced her credit limit in half, she protested that it was a violation of the new credit card rules because the bank did not provide advance notice of the credit reduction. <br />Does the bank have to reverse the reduction and reinstate her prior credit limit?<br />
  9. 9. fairfaxcounty.gov/consumer<br />Credit Limit<br />Advance notice is not required if:<br />The credit card cuts your credit limit.<br />Close your account. <br />Make changes to variable and promotional interest rates. <br />Notice would be required if the reduction in the credit limit triggered an over-limit fee or penalty rate.<br />
  10. 10. fairfaxcounty.gov/consumer<br />The Right to Opt Out<br />You have the right to opt out or reject certain significant changes in terms on your accounts. <br />Opting out means the cardholders agrees to close their account before fee increases take effect. <br />You may have up to five years to pay the balance under the old terms. <br />
  11. 11. fairfaxcounty.gov/consumer<br />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%. <br />Late Payment Warning<br />
  12. 12. fairfaxcounty.gov/consumer<br />Credit Card Repayment Calculator<br />
  13. 13. fairfaxcounty.gov/consumer<br />Over-the-Limit Transactions<br />Cardholders cannot be charged over-limit fees unless they give permission or opt-in to the card issuer to approve transactions that exceed their credit limits. <br />If you opt-out, a transaction that would take you over your limit, may be turned down. <br />If you do not opt-in and your credit card company allows a charge to go through, it cannot charge you an over-the-limit fee. <br />If you opt-in, your credit card company can charge only one over-limit fee per billing cycle. <br />You can opt-in at any time. <br />
  14. 14. fairfaxcounty.gov/consumer<br />Over-the-Limit Transactions<br />If you don’t have enough credit available on your card, do you really want to give the card company permission to charge you a fee to cover a purchase if you don’t have enough credit available? <br />
  15. 15. fairfaxcounty.gov/consumer<br />Caps on High-Fee Cards<br />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. <br />Example, if your initial credit limit is $500, the fees for the first year cannot be more than $125. <br />This limit does not apply to penalty fees, such as penalties for late payments. <br />
  16. 16. fairfaxcounty.gov/consumer<br />Standard Payment Dates and Times<br />Your credit card company must mail or deliver your credit card bill at least 21 days before your payment is due. <br />Your due date should be the same date each month. <br />The payment cut-off time cannot be earlier than 5 p.m. on the due date. <br />If your payment due date is on a weekend or holiday you will have until the following business day to pay. <br />
  17. 17. fairfaxcounty.gov/consumer<br />
  18. 18. fairfaxcounty.gov/consumer<br />Can They Do That?<br />On Saturday, Marco paid the full balance of $357 on his credit card at his bank branch. His payment was two days early, since payment wasn’t due until Monday. When his new statement arrived, Marco was hit with a $39 late fee and an interest rate increase of 2%. When he contacted the bank he was told he was late because Saturday is not an official business day and since Monday was a holiday, his payment was not posted until Tuesday.<br />Can the new credit card rules help Marco?<br />
  19. 19. fairfaxcounty.gov/consumer<br />Payments<br />If you make more than the minimum payment on your credit card bill, your credit card company must apply the excess amount to the balance with the highest interest rate. <br />
  20. 20. fairfaxcounty.gov/consumer<br />No Two-Cycle Billing<br />No double billing. <br />Credit credit issuers cannot include the previous billing period when calculating the amount of interest charged in the current billing cycle. <br />The double billing cycle used the average daily balance of the current and previous billing cycles. <br />This is the most expensive way finance charges are calculated. <br />
  21. 21. fairfaxcounty.gov/consumer<br />Underage Consumers<br />According to a recent Sallie Mae study, college students carried an average balance of $3,173 on their credit cards in 2009. <br />82% revolved a balance each month. <br />
  22. 22. fairfaxcounty.gov/consumer<br />Underage Consumers<br />If You Are Under 21 <br />You will need to show that you are able to make payments, have an independent means of income or you will need a cosigner in order to open a credit card account. <br />If you have a card with a cosigner and want an increase in the credit limit, your cosigner must agree in writing to the increase. <br />No prescreened card offers can be made to persons under 21 unless they have consented to receive such offers. <br />
  23. 23. fairfaxcounty.gov/consumer<br />Gift Cards<br />Gift Cardholders Protections:<br />Gift cards can’t expire for at least five years from the date they were activated.<br />Money added to the card at a later date must also be good for at least five years. <br />Issuer cannot assess inactivity fees unless you haven't used your card for at least one year. <br />Only charged one fee per month. <br />
  24. 24. fairfaxcounty.gov/consumer<br />Cards Not Included<br />These rules do not apply to: <br />Prepaid cards<br />Long-distance telephone services<br />Wireless telephone service<br />VoIP access time. <br />Reloadable cards that are not intended for gift giving.<br />Payroll cards<br />Flexible-spending account cards. <br />Loyalty, award, or promotional gift cards that are given as a reward or as part of a promotion. <br />You must be clearly informed of any expiration dates or fees for these cards. <br />
  25. 25. fairfaxcounty.gov/consumer<br />Gift Card Alert<br />Gift card funds aren't guaranteed and may become worthless if the issuer fails. <br />Buy from a business you know and trust. <br />Consider the financial condition of the business and whether it has filed or may file for bankruptcy. <br />
  26. 26. fairfaxcounty.gov/consumer<br />Credit Reports<br />Advertisements for free credit reports must state that free credit reports are available under federal law at AnnualCreditReport.com.<br />This disclosure will help consumers avoid confusing “free” offers that actually require consumers to spend money on credit monitoring or other products or services.<br />Nationwide consumer reporting agencies have to delay any advertising for products or services on AnnualCreditReport.com until after consumers get their free credit reports.<br />
  27. 27. fairfaxcounty.gov/consumer<br />Annual Credit Report<br />
  28. 28. fairfaxcounty.gov/consumer<br />Free Annual Credit Report<br />
  29. 29. fairfaxcounty.gov/consumer<br />Reasonable Penalty Fees<br />Your credit card company cannot charge you a fee of more than $25 unless:<br />One of your last six payments was late. The fee may be up to $35.<br />Credit card company can show that the costs it incurs as a result of late payments justify a higher fee. <br />Credit card company cannot charge a late payment fee that is greater than your minimum payments. <br />If you exceed your credit limit by $5, you can’t be charged an over-the limit fee of more than $5. <br />
  30. 30. fairfaxcounty.gov/consumer<br /> Fee Protections<br />No inactivity fees<br />You can’t be charge a fee for not using your card. <br />One-fee limit <br />You can’t be charged more than one fee for a single transaction that violates your cardholder agreement. <br />You can’t be charged more than one fee for a single late payment. <br />
  31. 31. fairfaxcounty.gov/consumer<br /> Rate Increase<br />If your APR is increased, the credit card company must tell you why. <br />After your APR is increased, the credit card company must re-evaluate your rate increase every six months. <br />If appropriate, it must reduce your rate within 45 days after completing the evaluation. <br />
  32. 32. fairfaxcounty.gov/consumer<br />Can They Do That?<br />Marco has a $3000 balance on his Fly Forever Express Card. He was notified in writing that in 45 days, the interest rate on his balance would increase from 12% to 29%. The card issuer explained that the increased rate was necessary due to market conditions. <br />What advice do you <br />have for Marco?<br />
  33. 33. fairfaxcounty.gov/consumer<br />Can They Do That?<br />Mel has a balance of $10,502 on his credit card. After losing his job, he stopped using the card but was more than 60 days late one time on his payment. The credit card company gave him notice that his interest rate would increase from 15% to 36%. <br />Can the bank do this? <br />What are Mel’s options?<br />
  34. 34. fairfaxcounty.gov/consumer<br />Get The Most From Your Credit Cards<br />Pay on Time.<br />Stay below your credit limit.<br />Avoid unnecessary fees.<br />Pay more than the minimum payment.<br />Read and watch for changes in the terms of your agreement. <br />
  35. 35. fairfaxcounty.gov/consumer<br />Debit and ATM Cards<br />Overdraft- When you make a purchase or ATM transaction but don’t have enough money in your account to pay for it. <br />Your bank must get your permission to cover overdrafts.<br />Opt in – Give your bank permission to cover your overdrawn and charge a fee. <br />Opt out – Bank cannot automatically charge you a fee. Your transaction may be declined. <br />Does not cover checks or automatic bill payments. <br />
  36. 36. fairfaxcounty.gov/consumer<br />Debit and ATM Cards<br />Sample Notice<br />
  37. 37. fairfaxcounty.gov/consumer<br />Credit Card Fees<br />Annual Fee<br />Cash Advance Fee<br />Balance Transfer Fee<br />Over-the-Limit fee<br />Late Fees <br />Lost or Stolen Card Fee<br />Return Payment Fee<br />Foreign Transaction Fee<br />Copy Fee<br />
  38. 38. 12000 Government Center Parkway, Suite 433<br />Fairfax, Virginia 22035<br />703-222-8435 TTY 711<br />www.fairfaxcounty.gov/consumer<br />consumer@fairfaxcounty.gov<br />fairfaxcounty.gov/consumer<br />Contact Consumer Affairs<br />

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