With February just around the corner, credit card users can finally look forward to the benefits of the new federal credit rules passed last summer.
The changes include prohibitions or limits on a number of card issuer billing practices that are unfair or that difficult to understand even if disclosed: (1) universal cross-default; (2) any-time, any-reason rate changes; (3) retroactive application of interest rates; (4) two-cycle billing; (5) unlimited applications of overlimit fees in a single billing cycle; (6) opt-out of overlimit transactions; and (7) require pro rata application of payments to balances accruing at different interest rates. In addition, it requires issuers to define the due date, requires payments received by 5pm EST on the due date be treated as timely, and creates a presumption of timely payment for payments sent by mail at least 7 days before due.
Finally, it eliminates the use of “fee harvester” cards where the initial fees approach the credit limit of the card, resulting a credit line that is nearly useless and impossible to pay.
The legislation takes effect February 10, 2010.
By Doug Beaton