The Credit CARD Act, Phase III

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On August 22, 2010, certain “Phase III” provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) become effective. Though this was supposed to be the final implementation of the act, some provisions have been delayed until December.

Here are key points that kick in this month.

  • Your credit card issuer cannot charge you fees of more than $25 if you make a late payment, unless you’ve abused the terms of your account and the issuer can show the higher fee is reasonable in proportion to the violations.
  • If you make a late minimum payment, penalty fees can not exceed the amount of the minimum payment. For example, you pay the required minimum payment of $15 after the past-due date. Even though your payment is tardy, the penalty charged in late fees cannot add up to more than your minimum payment.
  • Charging multiple penalty fees based on a single late payment or other violation of the account terms is prohibited.
  • Your interest rate may have gone up since January 1, 2009. If so, your card issuer must reevaluate the rate change and reduce it if necessary.

Other provisions include prohibiting inactivity fees if you don’t use your credit card, reviewing interest rates after a cardholder makes on-time payments for six months, and extending the expiration date of gift cards to five years.

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