• Late fees – creditors must provide at least 21 days from the date the bill is mailed, for you to pay your bill. In addition, bills cannot be due on weekends or have adjusting due dates (the 17^th one month and the 18^th the next). 
• Over- limit fees – before you can make a purchase that exceeds your credit limit, you will have to “opt-in” and authorize receiving an over-limit fee. If you do not, the purchase will not go through. 
• Interest rates and interest calculations –
  • A creditor cannot increase your interest rates on your current balance due to clauses in agreements such as, “any time, any reason” or “universal default.” The ban also severely restricts retroactive rate increases due to late payment.
  • Interest on promotional rate credit cards must last for a minimum of six months.
  • Payments made that exceed the minimum payment due must be applied to the highest interest rate portion of accounts. So, if you have an account with an interest rate of 23.99% for cash advances and 14.99% for purchases, the excess amount must go to the cash advance balance.
  • The practice of calculating interest for the current month on the previous month’s balance is now prohibited. 
• Plain language and Clear Information –
  • Contract terms must be in written in clear language and disclosed in such a way that consumers can understand them and effectively manage their finances.
  • Information regarding how long it will take and how much it will cost the consumer to pay off an account, if they only pay the minimum due each month, must be shown on monthly statements.
  • The creditor must also show the payment and interest cost if the consumer were to pay the debt off in 36 months. 
• Other new rules –
  • Fees on subprime or low-limit credit cards are substantially reduced and regulated. Consumers can no longer be charged numerous fees on the credit card, just for opening the account.
  • Store cards and gift cards – the law limits inactivity fees on cards for the first 12 months it is open.  In addition, any fees for the cards must be clearly disclosed.

As always, it is up to us, the consumers, to carefully read the terms of any credit card we have or decide to open. The rules and regulations in the CARD Act are meant to provide consumers a clear and concise foundation to successfully navigate the world of credit and personal finance.

Protection for students and young people
The act provides these protections for those under age 21:

• Ends prescreened credit offers to people under the age of 21 unless consent has been provided by the consumer
• Adults under 21 years old can only be approved for credit if they can prove income or have a parent or guardian cosigner
• Credit limits for students without a co-signer  will be capped at $500 or 20 percent of annual income, whichever is greater
• Credit limit for students with a co-signer are capped at 30 percent of income
• Colleges are required to publicly disclose any marketing contracts made with a card issuer
• Credit card companies are restricted from offering gifts to students on college campuses for filling out a credit card application

Protection for all consumers
The act extends the following bans, preventions and accountability for all consumers:

• No rate hikes in the first 12 months of a new account
• Promotional rates must last at least six months
• Creditors must provide 45 days notice before changing interest rates
• Payments and excess payments must be applied to balances incurring the highest interest rate
• Statements must be mailed to cardholders at least 21 days before the payment is due
• Card companies can raise rates due to late payments, but the rates must be lowered back if the cardholder is current on payments for six months
• Retroactive rate increases on existing balances due to “universal default” (late or missed payments with a different creditor) are banned
• Restricts retroactive rate increases due to late payments
• Prevents over-the-limit fees; cardholder’s must “opt in” to being allowed to charge more than their credit limit
• Opting in would allow the creditor to charge an over-the-limit fee
• Limits fees  on gift cards and stored value cards (such as prepaid credit cards, gift certificates and gift cards)
• Card companies are prohibited from double-billing determined by using the previous month balance to calculate interest charges on the current month
• Card issuers must display on account activity statement, how long it will take to pay off the existing balance and how much it will cost if the consumer only pays the minimum due
• Card issuers must display on account activity statements the payment amount and total interest cost to pay off the existing balance in 36 months
• Credit card contract terms and activity statements must be in language that consumers can see and understand

Whether you manage your credit and debt on your own or if you use a Debt Management Plan to repay debt, it is important protect yourself by:

•  Understanding how much your credit costs by knowing interest rates on all of your accounts
• Opening and reading all mail or email received from your credit card companies
• Making all payments on time, and
• Avoiding the use of credit by spending money you actually have

Additional information about credit counseling and debt management plans is available on the American Financial Solutions’ web site.