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Credit Card Bill of Rights
May 23, 2009
What Every Credit Cardholders Needs To
Know About the Credit Card Bill of Rights
President Obam signed the Credit Cardholders'
Bill of Rights Act of 2009. This bill amends the
Truth in Lending Act and provides consumers with
many reforms to the way credit cards are issued
and administered today. According to the bill,
here is a summary from the Library of Congress
of what it means to consumers:
- Creditors cannot increase the annual percentage
rate (APR) during the first 12 months of opening
up an account.
- Creditors are required to provide consumers
with a 45-day advance notice of changes in rates
and significant contract changes. Rates that
change due to a change in the index that the
rate is based on are excluded from this 45-day
notice requirement.
- Promotional rates need to be in effect for
at least six months from the beginning date
of that promotion.
- Creditors need to provide a 30-day advance
notice of an account closure.
- With certain exceptions, credit card issuers
are prohibited from charging a finance charge
based on the double billing cycle method.
- Creditors are prohibited from charging a
fee on an outstanding credit card balance at
the end of the billing period if the fee is
attributed to the interest accrued on an outstanding
balance that was fully repaid during that preceding
billing period.
- Consumers have the right to reject a new
credit card after the creditor notifies a consumer
reporting agency of its corresponding account.
- Creditors are required to remove information
provided to a consumer reporting agency about
newly established credit card accounts if the
consumer has not used or activated the account
and and if the consumer contacts the creditor
within 45 days of its establishment to close
it.
- If two or more different APRs apply to different
portions of an outstanding balance, the amount
of any payment above the required minimum payment
needs to be applied to the balance with the
highest APR first and then to lower APR balances.
- Creditors are required to provide a grace
period for payments even if the cardholder takes
advantage of a promotional rate balance or deferred
interest rate balance.
- Creditors are required to send credit card
statements at least 21 days before the due date
of the outstanding balance.
- Creditors are prohibited from providing credit
to consumers under age 18 (unless they are emancipated
under state law, or the consumer's parent or
legal guardian is designated as the primary
account holder).
- For college students who do not have a co-signer,
the maximum amount of credit extended will be
limited to the greater of 20 percent of the
student's annual gross income or $500 dollars.
The aggregate amount of credit extended from
all of their credit cards will be limited to
30 percent of the student's annual gross income
(for the recently completed calendar year).
- Creditors are prohibited from opening a credit
card account for any college student who does
not have any verifiable annual gross income
or already maintains a credit card account with
that creditor, or any of its affiliates.
- Creditors are prohibited from charging a
fee to make telephone and web-based payments.
However, a fee may be charged for expedited
telephone payments made on the due date or the
day before the due date.
- Creditors are required to post their written
credit card agreements on the internet.
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