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Getting to Know the Credit Card Rules: Credit CARD Act of 2009

Getting to Know the Credit Card Rules: Credit CARD Act of 2009. NEW!. February 22, 2010. Communicate with Consumers. CHANGE. COMING. Communicate What? When?. Interest rate increases Fee Changes Other significant changes. 45 Days Notice Required. CAUTION!. Interest Rates.

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Getting to Know the Credit Card Rules: Credit CARD Act of 2009

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  1. Getting to Know the Credit Card Rules:Credit CARD Act of 2009 NEW!

  2. February 22, 2010

  3. Communicate with Consumers CHANGE COMING

  4. Communicate What? When? • Interest rate increases • Fee Changes • Other significant changes 45 Days Notice Required

  5. CAUTION! Interest Rates

  6. When Changes are Coming: Cancel Card Accept changes Risk increased payments Decisions

  7. Exceptions • Variable interest rate tied to index • Introductory rate expires • Fail to make payments as agreed 45- day Notice

  8. Time to Pay Off Balance New balance $3,000 Minimum payment due $90.00 Payment due date 9/20/XX Late payment warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 late fee and your APRs may be increased up to the Penalty APR of 28.99%. Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example: If you make no additional You will pay off the And you will end up charges using this card and balance shown on this paying an each month you pay. . . statement in about. . . estimated total of Only the minimum payment 11 years $4,745 $103 3 years $3,712 (Savings +$1,033)

  9. Rate, Fee and Limit Changes Interest rate increases for the first year

  10. Exceptions • Variable interest rates • Introductory rate ends • 60+ days delinquent • Non-compliance in workout agreement Exceptions

  11. Increased rates apply only to new charges Old New Do not apply Increased rates apply

  12. Opt-Out No o-t-l transactions No fees if o-t-l transaction slips through Opt-in Allows o-t-l transactions Only one fee per billing cycle Can be revoked at any time Over-the-limit (O-T-L) transactions

  13. Annual fees, application fees, etc. Capped at 25% of initial credit limit Example: Card limit $500 x .25 Max first year fees $125 Exception: Does not apply to penalty fees Limits high card fees

  14. Must receive bill 21 days before due Consistent due date 5:00 pm cut-off Weekend/holiday provisions Standard Payment Times

  15. Fair Application of Payments • Payments above minimum applied to highest interest rate first • Exception: Deferred interest plan • Consumers: • Pay less interest • Get out of debt faster

  16. Ends Double-Cycle Billing Two-cycle billing bases finance charges on both the current and previous balance More costly to consumers Finance charges will now be computed only on current cycle purchases

  17. Deceptive Marketing of Credit Reports Advertisements for free credit reports must disclose that free credit reports are available under Federal law at: www.AnnualCreditReport.com

  18. Restricts Cards to Students Applicants < 21 must have Adequate income OR Cosigner OR Completion of certified financial literacy course Restricts credit limit increases Limits prescreened offers Restricts promotional gifts Disclosure of marketing contracts

  19. Establishes Gift Card Protections Five year expiration limit Limits inactivity fees Yields to stronger state laws Covers both retailer gift cards and prepaid general use gift cards Limitations to coverage

  20. Summary: Changes address • Communication requirements • Rate and fee increases • Balance pay-off data • Over-the-limit restrictions • Protections for underage consumers • Billing and payment structure • Deceptive marketing of credit reports, and • Gift card protections

  21. Any Questions? For more information about managing money, credit, saving and investing ask about the LSU AgCenter’s Saving and Investing for Life (SAIL) Program.

  22. References • Board of Governors of the Federal Reserve. (2010). What you Need to Know: New Credit Card Rules. • Consumer Union. (2009). Upcoming Credit Card Protections. • Johnson, C. & Gorham, E. (2009). Credit CARD Act of 2009: The changes and when they take place. Extension Extra. South Dakota State University Extension Service. • McFadden, L. (2009). 8 major benefits of new credit card law. Retrieved from www.Bankrate.com 7.1.09 • Prater, C. (2009). What the new credit card reforms mean to you. Retrieved from www.CreditCards.com • The White House. (May 22, 2009). Fact Sheet: Reforms to Protect American Credit Card Holders. Retrieved 7/2/09 from www.whitehouse.gov/the_press-office/Fact-Sheet-Reforms-to-Protect-American-Credit-Card-Holders

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