New CARD Act Provisions Provide Additional Protections for ConsumersThursday, August 19, 2010

Next release of consumer protections planned for August 22, 2010

ATLANTA, GA — Designed to protect consumers and promote sound credit management, the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) has helped ensure that responsible consumers would not fall victim to sometimes costly practices by credit card companies. Many provisions of the act went into effect earlier this year; another round of consumer protections is expected to be released on August 22.

“While the CARD Act may offer peace of mind for some consumers, it is imperative that these protections complement efforts by cardholders to use good judgment when it comes to managing their credit card spending,” said Mechel Glass, director of education for CredAbility. “There is no legislation that can replace our own commitment to building and maintaining a solid credit history.”

Among the regulations scheduled to take effect on August 22:

• For consumers who have a one-time late payment, late fees cannot exceed $25. This fee rises to up to $35 for consumers with another late payment in one of the last six payments. If the credit card company can demonstrate that the costs incurred as a result of the late payments justified a higher fee, they are allowed to impose a higher penalty.
• Late payment fees cannot exceed the minimum payment on the account.
• If a charge exceeds the account’s credit line, the over-the-limit fee cannot exceed the amount of the actual charge.
• No fees may be charged due to inactivity on an account.
• Consumers can no longer be charged multiple penalty fees for the same transaction. For instance, a cardholder cannot be charged both a late fee and an over-limit fee resulting from the same transaction.
• Credit card companies must explain any increase in the card’s Annual Percentage Rate (APR). If the APR is increased, the credit card company must re-evaluate the increase every six months, and if appropriate, reduce the rate within 45 days after completing the evaluation.

Consumers have a responsibility to understand the changes and to review the documentation that comes from their credit card companies. “Reviewing monthly statements, reading inserts, and keeping up with changes to the CARD Act are great ways for consumers to manage their accounts,” added Glass. For consumers who need help understating how the provisions of the CARD might impact them, CredAbility can help. Certified counselors can help you review your current financial situation and work with you to create a budget and financial plan to get you back on track. Contact CredAbility at 800-251-2227 or online at www.CredAbility.org.