Effective August 22, 2010 the following new rules now cover credit card transactions and use. Good news for consumers. In addition to the points below, as of now, credit card companies are prohibited from increasing rates within the first year an account is opened.
Reasonable penalty fees
Let’s say you are late making your minimum payment.
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Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:
- one of your last six payments was late, in which case your fee may be up to $35; or
- your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.
In addition, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can’t be more than $20. Similarly, if you exceed your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.
Additional fee protections
No inactivity fees. Your credit card company can’t charge you inactivity fees, such as fees for not using your card.
One-fee limit. Your credit card company can’t charge you more than one fee for a single event or transaction that violates your cardholder agree- ment. For example, you cannot be charged more than one fee for a single late payment.
Explanation of rate increase
If your credit card company increases your card’s annual percentage rate (APR), it must tell you why.
Re-evaluation of recent rate increases
Under the new rules: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.