CARD Act Credit Card Changes on February 22nd

The Credit Card Accountability, Responsibility and Disclosures Act or CARD Act that was signed on May 22, 2010 provides changes to credit card guidelines and goes into effect on February 22, 2010.

According to the Act credit card regulations and disclosures will be easier to understand and more transparent but at a higher cost to consumers. There will be additional or higher upfront costs for the consumer because of the CARD act. This will greatly impact lower to middle income consumers and consumers with bad credit who are only able to make the minimum monthly payments. Here are some key facts to be aware of regarding the CARD act:

1. Interest Rate Hikes. Interest rate hikes would not be applied to existing credit card balances but is still allowed provided credit card companies give at least 45 days advance notice.

2. Existing Balances. Limits interest rate hikes on existing balances in certain instances.

3. Minimum payments. Credit card companies must disclose the risks of making only minimum payments each month including how long it would take to pay off the entire balance if they only made the minimum monthly payment.

4. Term Changes. Changes in terms on accounts cannot occur without 45 days advance notice.

5. Paying Bills. Credit card payments are due at least 21 days after the monthly statement is mailed.

6. Due Dates. Credit card companies have to set payment cut-off times no sooner than 5pm on payment due dates and payments due on weekends or holidays are not subject to late fees.

7. Over-the-limit Fees. Consumers will now have the option to "opt in" for being charged over-the-limit fees. Those who opt-out would be unable to exceed their credit limits and will be charged a fee.

8. Subprime Credit. Consumers with bad credit who get subprime credit cards are charged upfront fees but cannot exceed 25% of the available credit limit in the first year of using the card.

9. Requires easy explanation of disclosures. Disclosures would also be available online.

10. Under 21. Credit offers can not be made to anyone under 21 unless they have an adult co-signer or can provide proof that they have enough income to repay the debt.