5 On Your Side

Credit card law protects consumers

Posted February 18, 2010

For years, many credit card holders have dealt with interest rate increases, lowered spending limits and extra fees. The Credit Card Act is supposed to stop those practices and save customers money.

Under provisions of the law that go into effect Monday, the biggest changes involve interest rates.

Card issuers will not be able to raise rates for the first 12 months after new accounts are opened. On existing accounts, they will only be able to increase rates on future charges, not on existing balances.

Credit card law protects consumers Credit card law protects consumers

The only exceptions are that rates can be raised at the end of promotional offers or if customers make payments more than 60 days late.

"I'm glad to see the changes," said Rebekah O'Connell, a credit counselor with Triangle Family Services.

O'Connell said that she's for anything that helps consumers get out of debt faster, so she likes another change regarding how payments are applied.

"With the new rules, any payment above your regular minimum payment must be applied to the highest interest rate on the card," O'Connell said.

Also, fees for going over credit limits are banned unless customers agree to allow transactions that put them over their limit. The downside of that change is that without customers' prior consent, cards will be rejected if charges exceed the credit limit.

In another change, statements must explain how long it will take to pay off the balance and how much customers will ultimately pay if they make only the minimum payment.

Due dates for bills will be the same each month, and customers will have a 21-day minimum to make payments.

Finally, there are new protections for younger consumers. Those under age 21 will have to have a co-signer to get a card unless they can prove they have the means to make the payments. Issuers cannot advertise cards within 1,000 feet of a college campus or college event.

Industry experts believe that credit card companies will make up for lost revenue by adding new fees and raising rates for all consumers.

Most experts, though, said that the Credit Card Act is an overall improvement.

"I may never think that the rules are strong enough when it comes to consumer protection," O'Connell said. "But trying to make the statements more clear, trying to give people real time to get the payments in, giving people fair notice should help people better manage their accounts (and) make better decisions."


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  • NCGirlie Feb 23, 2010

    This legislation is a joke. And what little protections it does offer went into effect after a grace period of what? 6 – 9 month? Allowing plenty of time for the credit card companies to jack up rates, change billing cycles, delay in posting credits to accounts, and implement retroactive rate increases upon consumers. And they will continue to seek out any way to gouge the consumer. Is completely giving up credit the solution? I think not. We as consumers have been sold down the river. You can’t rent a car, book a hotel, rent a movie, buy a car, rent an apartment, etc with out a credit card or record of credit use. Its use has permeated much of our daily lives. As a small business owner, I rely on it. It’s not about being irresponsible consumers. It’s about a total disregard for any kind of decency from the banking industry when it comes to dealing with consumers, at all levels. Why wasn’t legislation written for force them to lower rates when prime lending rates

  • readme Feb 23, 2010

    No amount of legislation will fix the real problem, which is irresponsible consumers refusing to take responsibility for their own actions. How many people have mountains of cc debt, but still live in a bigger house than they need, eat out a lot, or refuse to drive a car made more than five years ago?

  • godnessgracious Feb 19, 2010

    I owe $144 to capital one, after I pay that I hope to never have a credit card for the rest of my life. These protections are a joke. I hope to die with an empty mailbox. No money owed, no open accounts, nothing. If I have to live in a tent I will.

  • mbatchelor44 Feb 19, 2010

    Some Payment sites will not allow a same nor next day payment; therefor making the payment late. I have several location like that. Some banks are also reducing my credit limit and when I ask about it they refer to their discrepancy terms (that they have to right lower the credit limit according to the ourstanding balances shown on the person's credit report). I have had everyone of my credit card payment to increase by $100 or more per month. My salary has not increased, but everything else has. The middle (lower middle) class need some help along with the lower income clsss. We are paying for those who cannot or will not pay.

  • childofNC Feb 19, 2010

    I was 39 minutes late making a payment (thought I had until midnight on the due date but it was 5 p.m. my time zone). The card increased my interest from 7.15 to 22! Paid them off next cycle.

    Paid off WalMart/Discover while considering purchasing a new tv (my newest tv is over 16 years old). They immediately checked my credit (score was higher than when I opened the account) and they changed my limit from 2500 to 500. Now I only use them to purchase gas and pay them off each month.

  • UNC81 Feb 19, 2010

    The "no annual fee" card will probably become a thing of the past. These companies will have to make up their lost profits somehow.

  • aspenstreet1717 Feb 19, 2010

    The outcome of this is that everyone will be paying higher interest and fees. The new laws only 'protect' people who probably use their credit card too much.

  • luv to camp Feb 19, 2010

    One of my credit cards just sent me a notice that they will be adding a $60 annual fee (even though I never had a fee on any of my cards for the past 24 years). They will credit the fee as long as we charge $2400.00 each year - how nice of them.
    Guess what, we are saying bye bye to that card. I never have and never will pay an annual fee.