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The Credit CARD (Card Accountability, Responsibility and Disclosure) Act of 2009 was signed into a law on May 22. The changes made were meant to protect consumers from unreasonable terms and conditions of credit card companies. As a consumer and credit cardholder, how can you benefit from the new law? In this article, let’s discuss the new credit card rules:

Rules on Credit Card Fees. Consumers cannot be charged with extra fees by attempting to pay their credit card balances through phone-banking or the internet. In addition, a cardholder cannot be penalized for exceeding the credit limit by more than one fee per billing cycle. No Double-cycle Billing. With the double-cycle billing method, a cardholder can incur the interest rate charge based on his/her current and previous balances. Today, this practice is not anymore allowed. High-rate debts are priority. In the past, the payments submitted are first applied to lowest rate balances. Under the new Credit Card Law, payments submitted will first be applied to the highest rate balance to give credit cardholders an easier time eliminating debts. Lengthier period on payment notices. It used to be that credit card issuers are required to send billing statements at least 14 days in advance. The change to the law has increased the length of payment period to 21 days so cardholders will have more opportunity to avoid APR and penalty charges. Rules on Interest Rate Increases. The new Credit CARD Law prohibits issuers from increasing the current interest rate without first giving an advanced notice. The cardholder must be notified 45 days in advance prior to the application of the new rates unless the introductory period has expired. Introductory rates must be provided for a length of 6 months and no less.

Furthermore, credit card issuers cannot penalize a borrower for submitting late payments with other accounts. The “universal default clause” can no longer be included in the contract. If the cardholder falls behind his/her payments for 60 days or more, the interest rate can increase. However, if the cardholder makes it up by timely payment for six consecutive months, the issuer must restore the original rate.

[Article: Advantages of the New Credit Card Law]

Nevertheless, consumers must keep in mind that for credit cards with variable interest rates, there is no rule that imposes a cap limit on rate increases. That means your current variable rate can double or triple, depending on the Prime Rate.