Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

CARD legislation affects all credit card consumers starting in 2010. This act goes into effect in February 2010. Changes resulted from this act are intended to make it easier for you as a consumer to manage your credit card accounts.

While each credit card company will respond with its own changes to address this legislation, here is the brief summary of what to expect.

Interest Rates Hike & Late Payment

Credit card companies have made a killing by raising interest rates on existing balances if you fail to make a payment on time or are little late on your payment. Remember, credit card companies already charge you a late fee for not making payment on time so any additional penalties such as raising interest rates are considered double penalties in most cases. As a result of this act, your rate for existing balances will no longer be raised for being a few days late with your payment. However, if your payment is received after your due date, you’ll still be charged a late payment fee.

Annual Percentage Rates (APRs) on Existing Balances

Beginning in February 2010, your Annual Percentage Rates (APRs) on existing balances can only be raised if you do not make your minimum monthly payment within 60 days of your payment due date. IF your Annual Percentage Rates are increased because of this reason, your existing balances can return to the original Annual Percentage Rate if, for the next six month following the increase, you make required payments by the due date. This rewards responsible fiscal behavior following mistakes or credit troubles.

Over The Credit Limit Fee

As a result of this act, most credit card companies will have to make changes to not charge a fee for going over your credit limit. Remember, any transaction that would cause you to exceed your credit limit may be declined. To avoid inconvenience when using your card, it is more important than even to be aware of your credit limit and how close you are to your credit limit.

Allocating Payment Towards Balances

Any amount you pay over the minimum payment will now be used to pay down balances with the highest Annual Percentage Rate. Credit Card companies used this amount differently in the past by allocating this payment to balances with lowest APR. To provide you better understanding of how it will work in future, here is an example:

Let’s say you have a credit card account with two balances. The first balance has a promotional Annual Percentage Rate of 4.99%, the second balance has a APR of 20.99%. If your minimum payment is $200 and you pay $300, the extra $100 is applied to the higher rate balance.

Adjusting Your Payment Date

For the convenience of consumers, payment date will always fall on the same date each month and will be at least 25 days from the closing date printed on your credit card statement.