August 23, 2009


Thursday of last week (8/20) marked the first wave of the much anticipated (and much needed) credit card legislative changes for consumers. Below is a summary of the credit card modifications (8/20/2009) ...

All credit card statements must be mailed 21 days prior to due date, rather than the prior 14 day grace period. The law states that a card company cannot charge late fees if statements are not delivered at least 21 days before the payment due date.

A 45 day notice prior to any increase in APR (annual percentage rate) and any "significant changes" in contract terms (as deemed by the Federal Reserve Board) must now be afforded consumers. This notification must explain the steps for cardholders to take to exercise their rights to cancel the account -- a toll free number and deadline for opting out must be provided.

Consumers will have the right to cancel ("opt out" of) a card to avoid adverse changes in terms. This would provide the card holder with the ability to repay the card balance under the original terms (hopefully this is obvious, but opting out would preclude the consumer from continuing to use the card for new purchases). There are a few key exceptions to this opt out policy:

(1) Consumers cannot opt out of increases in the minimum payment
(2) Consumers cannot opt out of rate changes on variable rate cards
(3) Consumers 60 days late (or more) making payments cannot opt out
(4) Consumers cannot opt out of reductions in credit limits

The next waves of legislative changes will take place in February and August 2010. The following link provides a helpful view of the credit card reform timeline. Also, I posted an overview of the C.A.R.D. Reform in May that discusses in more detail these upcoming changes.