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The Credit Card Act of 2009

The Credit Card Act of 2009 was put in place to address issues consumers were having with excessive interest charges, among other things, and to help the consumer get off the credit card highway. With fees and interest charges, the credit card companies were earning billions of dollars a year while the average consumer was not able to reduce the principal balance on their credit cards.

  • Interest Rates May Not Be Increased in the First 12 Months
    Under the Credit Card Act of 2009, credit card companies may not increase the interest rate on your account for the first twelve month. That rule does not apply if you signed up for a variable rate and is attached to an index rate that fluctuates within that first year. Interest rates may also go up after, at least, six months if you've obtained a card with an in introductory rate and it has expired. Credit cards can also increase the interest rate if you have a payment that is 60 days late or longer. Also, interest rates can be increased if you've negotiated a payment plan with the credit card company but fail to make a payment on time.
  • Interest Rate Changes Can Only be Applied to Future Purchases
    If the credit card company raises your rate after the first year, the new rate can only apply to future charges. Any prior balance will only be charged at the prior interest rate. The Credit Card Act of 2009 requires lenders to notify at least 45 days in advance of a scheduled rate increase.
  • You Have the Option to Reject the Interest Rate Change
    If your company notifies you of an impending interest rate change you have the option to cancel the card before that new rate takes effect. However, if you opt to reject the interest increase that may mean your card is cancelled. It may also mean the credit card company can increase your minimum monthly payment, or may require you to pay off the balance on the account within five years.
  • Interest Rates and Overall Costs Must be Clearly Stated
    Credit card companies are now required to provide additional information on you monthly statement including the length of time it would take the consumer to pay off the balance and how much the interest will cost you over the period of several years.
  • Payments Must be Applied to the Highest Rate Balance
    If your payment is made for more than the minimum requirement the difference must be applied to the highest rate balance. This rule does not apply if you currently hold a credit card with a deferred interest plan. Credit card companies may also not access interest charges on balances in the current billing cycle.

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