Thank You, Congress and Mr. President

The government has done something really great for consumers who are not able to pay off their credit cards every month–meaning most of us. Credit card companies will still have us by the short hairs, but some of the worst rules have been outlawed by Congress and the President, effective February 13, 2010. Here is a short list of changes:

>>The interest rate can no longer be raised for being a few days late. The company can still hit you with a late payment fee, but they cannot raise the interest rate. One credit card company raised the interest rate on my card from 9.99% to 23.99% for a partial payment when the company changed the minim payment. I know, I should have flyspecked the bill before I paid it, so it was my fault. However, after the new law goes into effect, the interest rate on an existing balance can only be raised if the minimum payment is not made within 60 days of the due date.

>>One of the most important reforms is the requirement that when you pay over the minimum, the excess must be applied against the balance with the highest–not lowest–interest rate. Now, if you have a promotional rate on part of your balance, you can pay off higher-rate balances first.

>>No penalties for accidentally exceeding the credit limit. Transactions that exceed the credit limit must be declined unless the consumer authorizes the transaction knowing that it puts the account over the limit.

Credit card companies can still raise the interest rate for future transactions, so making payments late or going over the credit limit may have negative consequences. It is only existing balances that are protected.

These are only a few of the more important changes. For more information, do an Internet search for the Credit Card Accountability, Responsibility and Disclosure Act of 2009.


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2009 John B. Payne, Attorney

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