You can stop stabbing your Citi or Chase voodoo doll. According to CBS News, new credit card legislation is going into effect later this month – and it is intended to protect you from the big bad creditors.
The provisions are the last new changes in the Credit Card Accountability, Responsibility and Disclosure Act of 2009, and they go in effect on February 22nd. The Act will limit how and when banks can change your existing interest rates and fees. First, it requires that the extra amounts you pay must be credited to the portion of your balance with the highest interest rate and requires them to send your bills at least three weeks in advance of when they’re due.
More good news: credit card companies will no longer be able to charge you over-the-limit fees. Instead, your card will get declined. (It may seem embarrassing, but it’s the more practical way to go.) Companies will undoubtedly try to enroll you in “overdraft protection,” meaning that you can keep charging even when you’re past your limit. Make sure to opt out to avoid more fees.
Card companies are also restricted from increasing your interest rate if your payment is just a few days late. The new magic number is 60 days, so be sure to pay within that time frame.
Amidst the changes, beware of creditor backlash. Companies may start charging annual fees, inactivity fees, etc. They’re required to notify you of such changes in writing, so read all your mail carefully!
(Photo: Lotus Head via Wikimedia Commons)
