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Aug 24, 2011   //   by Gina Lynd   //   Credit Cards, The Shoe Box Blog  //  No Comments

See what these rules mean for you

By now, you have heard about the new laws (the Credit CARD Act of 2009 and revisions to Truth In Lending) that brought many changes to the credit card industry. These changes apply to all consumer credit cards, including retailer credit cards.

A number of additional new changes took effect on August 22, 2010. Here‘s what you can expect to see with your credit cards, including retailer branded credit cards.

Limits on Penalty Fees

Penalty fees will not exceed $25 for the first violation, and $35 for any additional violation of the same type that occurs within the next six billing cycles.

In any case, you will not be charged a late or returned check fee which exceeds the actual minimum payment due.
Example: If a minimum payment due of $38 is late, the late fee for the first violation will not exceed $25. If a minimum payment due of $19 is late, the late fee amount will not exceed 19.

You can only be charged one penalty fee for the same event.
Example: If a payment is made late AND the check used to make the payment is returned unpaid, either a late fee OR a returned payment fee could be charged, but not both since fees are the result of the same event (a payment).

Review of Annual Percentage Rate (APR) Increases

In general, increases to the Annual Percentage Rate (APR) must be reviewed every six months and lowered if the factors which caused the rate increase have changed. Although the rate does not have to return to the rate that existed immediately before the increase, the reduction would be applied within 45 days of the review.

Here’s what you see on your credit cards, including retailer branded credit cards, based on changes that took place in early 2010.

Your monthly credit card statement has changed.

Account statements are easier to read and give you more information at a glance, including:

  • The estimated time it will take you to pay off your balance by making only the monthly minimum payment due.
  • The amount you’d need to pay each month to pay off your balance in about 36 months.
  • Summary of fees and interest paid year-to-date.
  • An easy-to-understand late payment warning describing the potential impact of late payments.

More advance notice.

  • You receive a minimum of 45 days notice before any significant change in account terms is made to your account.
  • If you decide you don’t want to accept the change of terms, you can cancel your card prior to the effective date of the new terms.

Limitations on interest rate changes.

  • Interest rates cannot be raised on existing balances, except when:
      • You have an introductory rate, a promotional rate, or a special payment arrangement that expires.
      • You have a variable rate on your account.
      • Your payment is more than 60 days past due.
    • Otherwise rate increases will only apply to new transactions.

    Predictable due dates.

    • Your payment due date is the same day every month.

    Avoid pay-by-phone fees.

    • It doesn’t cost you anything to make payments through our automated phone system.
    • You’re only charged a fee if you speak to a customer service representative to make a payment the same day.

    Time to review your statement.

    • You have a minimum of 21 days between the day your statement is mailed and your payment due date.

    Amounts over the Minimum Payment Due are generally used to pay off higher rate balances first.

    • Any amount paid in excess of your minimum payment due each month will be paid to your highest interest rate balance first.
    • The only exception to this is the 2-3 billing cycles at the end of a deferred interest promotion. During this time we will apply any payment in excess of your minimum payment due to your expiring promotion. This will ensure you continue to have the best opportunity to pay your promotional balances before expiration.

    No over-credit limit fees.

    • Pay no over-credit limit fees when you exceed the credit limit on your card.
    • Be mindful that any transaction that will cause your balance to exceed your credit limit may be declined and would still be due in full on your next billing statement.

    Protection for those under 21.

    • Young adults under the age of 21 must provide an independent ability to repay along with their written or online application for credit or requests for credit line increases.

    Easy access to card agreements.

    • Samples of credit card agreements are posted online.
    • If you want a copy of your individual card agreement, you can request it either via a web site or a toll-free number.

    What can I do to get more information?

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