First Part of CARD Act Effective Today

Today is August 20th, and that means the first phase of regulations set out in the CARD Act are now in effect. Here’s the breakdown of the new rules that your creditors must follow:

Card issuers now have to notify you 45 days in advance about interest rate hikes.

Pro: This will give you more time to pay down or transfer your debt so the interest rate increase doesn’t cost you, or more time to opt out of the changes by closing your account (though you’ll have to pay off your balance in full within five years).

Con: New rule only applies to fixed-interest cards, not the other 90% of credt cards that came with an introductory rate, a variable rate, or a rate you have negotiated with your creditor.

Creditors must inform you of your right to cancel the credit card agreement if you don’t like the new terms.

Pro: You’ll be aware of your right to close the card and pay off the balance within five years under the old terms.

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Con: Even if you reject the new interest rate, the card issuer can still hike your minimum payments.

Creditors must mail statements a full 21 days before payment is due.

Pro: Gives consumers seven more days to pay their bills (currently, creditors only have to send statements out 14 days before payment is due).

Con: Due date traps (payments due on weekends and holidays, etc.) are still allowed until February 2010.

Visit for the full version of the legislation. The next (and more regulatory) round of CARD Act rules take effect in February 2010.

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