Here are a few of the protections from the CARD Act, compiled by Consumers Union. For the full list and more details, go online to www.tinyurl.com/creditcardprotect.
• Restricts interest rate increases during the first year.
Stops credit-card issuers from raising interest rates in the first year, with a few exceptions.
• Restricts interest rate increases on existing balances.
Limits increases with a few exceptions.
• Increases notice for rate increase on future purchases.
After the first year, the card issuer can raise the rate on future purchases with 45 notices.
• Preserves the ability to pay off on the old terms.
• Places limits on fees and penalty interest.
If the interest rate increases because the minimum payment is not received within 60 days after the due date, the rate must go back to the original lower rate if the consumer makes the next six minimum payments in a row.
• Requires issuers to consider consumer’s ability to pay.
• Requires fair application of payments.
Amounts in excess of the minimum payment must be applied to the highest interest rate, except in the last two months before a deferred interest balance is due.
• Provides sensible due dates and time to pay.
Prohibits credit-card issuers from setting early deadlines for payments. Payments must be received by 5 p.m. at a location set by the issuer. Due dates will be on the same day each month and the rule prohibits card issuers from treating a payment as late unless the bill is mailed or delivered at least 21 days before the due date.
• Protects young consumers.
Sets rules about issuing cards to those under 21.
• Requires enhanced disclosures.
• Establishes gift card protections.
Gift cards cannot expire less than five years from the date the card was purchased or money was last added to the card. No fees can be imposed if the card has been used within the past 12 months. If a card remains unused for 12 months, there can be one fee a month. The law covers retailer gift cards and prepaid gift cards by credit-card issuers. It does not cover rewards, loyalty, telephone or promotional cards or paper gift cards or certificates.
— Betty Lin-Fisher