credit cardsNew Credit Card laws strengthen oversight of credit card industry practices, increase the penalties for companies that violate the Truth in Lending Act for credit card consumers, and require the Federal Trade Commission to publish rules that prevent fraudulent marketing of free credit reports. Credit card issuers must post their agreements on the Internet and present those agreements to the Federal Reserve Board to publish on its website.

The law requires that consumers receive a fair amount of time to make payments on their credit card accounts, prohibits payment distribution methods that unfairly maximizes charges of interest, and limits fees that decrease the credit available to consumers. In addition, credit card issuers are prohibited from raising the interest rate on an existing balance when the consumer is making payments on time.

Credit card issuers are to provide cardholders with at least 45 days notice of annual rate changes, and to disclose changes in card terms that take effect upon renewal. Issuers must disclose the total interest that will be paid and the period of time if someone is making only the minimum monthly payment. Issuers must fully disclosure in billing statements of due dates and late payment penalties, and forbids the use of the term “fixed rate” unless the interest rate will not change for any reason over the period defined.

Credit card statements must be mailed 21 days before the due date, that due dates be the same day each month, and can neither treat a payment as late or deny a grace period that has been offered, nor set early morning deadlines for payments. Payments at local branches must be credited on the same day, and requires that payments in excess of the minimum be committed first to the card balance with the highest interest rate.

Issuers must consider the consumer’s ability to pay when providing credit cards or increasing limits, and cannot charge fees to pay by telephone, mail, or electronic transfer, or charge over-limit fees unless the cardholder has agreed to permit the issuer to complete over-limit business, and must assess penalty fees that are proportional and reasonable to the violation or omission.

Banks may not applying excessive fees to the credit available on high-fee, low-credit cards, or charge interest charges on debt paid on time. The credit card act prohibits “double-cycle billing” and mandates that when grace periods are made available, they must extend to partial payments, and prohibits unfair changes in terms and increases in interest rates.

Issuers may not increase APR, fee, or finance charge during the first year an account is opened and afterwards on outstanding balances subject to certain exceptions that do not permit “any time/any reason” or “universal default” repricing. Any increases of a cardholder’s interest rate must periodically reviewed and lowered if indicated by the review, and requires promotional rates to last at least 6 months. Certain gift-cards must now have at least a 5 year life span, and may not include the practice of hidden fees and declining values for gift-cards not used within a certain period of time.

Various provisions in the law have set limits on the prescreened offers of credit to young customers, and provides additional safeguards for young people who acquire cards. Issuers extending credit to customers under the age of 21 must now get the signature of a person 21 years or older who will be responsible for the debt or submit proof that the young card holder has an definite means of repaying any extended credit. The law forbids the increase of credit limits unless both the cardholder and the jointly liable cosigner agree to the increase, and enhances protections for students against incentives to obtain a credit card, and increases the transparency of arrangements between universities and credit card companies.

Many credit card companies solicit new credit card accounts by “prescreening”. Potential customers are identify and offered cards based on information in their credit reports. These solicitations can come by snail mail, a phone call, or in an email.

A creditor asks one or more of the consumer reporting companies for lists of people in their databases who meet certain criteria – a minimum credit score for example – or send their own lists of potential customers to the consumer reporting companies to identify people who meet their guidelines.

Some people would rather not be bothered by these solicitations, particularly if they are not in the market for a credit card, and may choose to opt out of future contacts because of the annoyance or to limit access to their credit report information. The Federal Government’s opt out program enforces the “no-call list”. Companies that send offers not based on prescreening must be added individually to the no-call list.

Prescreening can provide many benefits, especially if you are shopping for credit or insurance. Prescreened offers can help you keep abreast of what’s available, compare costs, and find the most suitable products for your needs. Because you are pre-selected, you can only be turned down under special circumstances. The terms of prescreened offers are often more favorable than those available to the general public. In fact, some insurance policies and credit cards are available only through prescreened offers.

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