The new rules protect credit card customers from exorbitant penalty fees, inactivity fees and will insure they receive warnings before interest rates are changed. Plus, if your credit card company does increase your APR, it has to re-evaluate that rate increase every six months.
On February 22, bankers were required to give customers 45 days notice before changing interest rates, the ability to opt out of changes and pay off your balance over 5 years, banned double billing cycles and made it harder for credit card companies to give a card to someone under 21 years old.
"It's funny. I was a banker for 23 years. Usually I'm across the desk from somebody explaining the rules," Dale Mingilton, the president of the Denver/ Boulder Better Business Bureau and retired FirstBank executive, said.
Mingilton gave us some insight into the changes, including those on late-payment penalty fees.
"In the past you paid the same expensive late fee whether your minimum required payment was small or large," Mingilton explained.
The new rule, according to Mingilton, says that your credit card company can't charge customers more than $25 for a late payment unless they have been late on one of their last six payments, in which case it can up the fee to $35. Also, companies can't charge a late payment fee that's more than the minimum payment owed. So if the minimum payment is only $10 this month, then $10 is all the company can charge as a late fee.
"Basically they've changed it so you can't be charged excessive amounts. The maximum you can be charged is $25, unless you've missed payments in the last 6 months. Then it can go up to $35," Mingilton said.
Mingilton says inactivity fees on the other hand weren't meant to be penalties, necessarily.
"A lot of times you could send all kinds of paperwork to folks and they'd never respond. The inactivity fee pinged them and would let us know if they still wanted the card," he said.
The BBB says the best advice for consumers it to read the entire contract before signing up for a credit card and always pay it on time.
To learn more about the new credit card rules visit the Federal Reserve Boards website http://www.federalreserve.gov/consumerinfo.
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