Credit Card Changes 2

You may have heard about the fee changes for credit cards as influenced by the Credit Card Accountability, Responsibility and Disclosure Act, back in February. Check out our introductory article about this Act by visiting: our February 24 post.
Recent revisions to this act went into effect August 22, 2010. Now the Feds are focused on regulating penalty fees and increased interest rates. The Credit Card Act explains that fees should be “reasonable and proportional.”

What does this mean?

For the most part these fees will now be regulated to benefit the consumer. Hopefully this will prevent credit card companies from raising fees as a solution to their own financial problems and help the average credit card holder manage better. Fees should not be more than 25 dollars (give or take) unless an issuer can prove to a regulator that a higher amount is fair in order to cover operation costs. For example: a 25 dollar late fee could rise to 35 dollars only if a holder is late a second time during the next 6 billing cycles. Also, credit card issuers are prohibited from charging a fee larger then the amount owed. If your minimum payment required is 25 dollars and you are late you cannot be charged a penalty fee of more than 25 dollars. If you are 10 dollars short when making the minimum payment they cannot charge you an additional fee for more than 10 dollars.
It is required by law that fees are explained up front and any fee increase be announced to customers 45 days in advance. Issuers are no longer allowed to charge penalty fees on inactive cards, but they can close the credit card if it is not being used.

Also rate increases issued between Jan. 1, 2009, and Feb. 21, 2010 be re-evaluated and reduced appropriately. However it doesn’t stipulate an exact amount that the actual rate should be decreased but it does say that any increases between must be re-evaluated. It does say holders should be given a lower rate in accordance with the new Credit Card Act unless their customer history makes it appropriate for them be charged more. This Act also stipulates that bad credit would be an acceptable reason for Credit Card issuers to charge higher fees, but the holder must be aware of the fees and why.

If your credit has been affected by too many credit cards, missing payments or you want to be approved for a good credit card, contact ICC for superior credit repair and a credit education that will make your credit count.