Articles - Archived Money Matters

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New Credit Card Protections for You

The third and final phase of the Credit Card Act, which was implemented by Congress in May 2009, will take effect August 22, introducing new rules and protections for credit card holders. Here's what's in store…

More fee protection

It's not surprising that consumers paid roughly $20.5 billion in penalty fees in 2009. Under the new rules, credit card companies cannot charge more than $25 for account violations. Exceptions include having one late payment out of the last six, or if the credit card company can show expenses it incurred as a result of your late payment.

Additionally, penalty fees cannot exceed your minimum payment. For example, if your minimum payment is $15, your late penalty cannot be more than $15. This same rule applies to over-the-limit fees. New laws also ban credit card companies from charging an "inactivity" fee, which means you will not be penalized for not using the account.

Explanation of rate increases

If faced with an increase in your annual percentage rate (APR), you are entitled to an explanation. Credit card companies are required to provide the reasoning behind their decision.

Re-evaluation of recent rate increases

Credit card issuers will be required to re-evaluate rate increases that have occurred since January 2009. Reviews must take place at least every six months. If it is determined that a reduced rate is appropriate, it must take effect within 45 days of completing the evaluation.

It is important to note that these changes may have an effect on the way several of your financial institutions do business—with the exception of LGFCU! That's because our products and services have always had the members' best interests in mind.