If you are a credit card user, then by now you have probably seen examples of the new credit card statements required by the Credit Card ACT. The new credit card statements are only one change required by the Credit CARD Act – there are a few other big changes in the credit card industry brought about by the CARD Act, and there also a few unexpected changes brought about by the card issuers themselves (hint: these are good changes for consumers!).
Credit CARD Act Changes
The Credit CARD Act was implemented in several stages, with the latest phase going into effect on February 22 of this year. Some of the major changes included limiting credit card interest rates and fees:
Credit card interest rates:
- Promotional interest rates, such as 0% balance transfers, must remain in place at least 6 months;
- Rate increases only apply to new balances, not retroactive balances;
- Card issuers cannot increase rates within first 12 months unless there is a late payment or promotional period ends.
Credit card fee restrictions:
- Card holders must consent to be allowed to make charges over their limits (limiting the possibility over the limit fees);
- Card companies can no longer charge payment processing fees for payments made online, over the phone, or via mail, but can charge expedited processing fees;
- Payment due dates are now listed as 5pm on due date, including weekends and holidays (many companies had an arbitrary cutoff in the am, increasing likelihood of late payments, even when the payment arrived on the specified date).
- Various limitations relating to the secured credit card and prepaid credit card industry.
Minimum age limits:
- The student credit card market changed with the new requirements that people must be age 21 or older to apply for a credit card, or show proof of income or have a co-signer.
Credit Card Companies respond
One of the big fears many people had about the Credit CARD Act was that there would be negative reactions in the industry and that many credit card companies would drastically reduce the amount of credit they offered, make it too difficult for people to obtain credit cards, or hike interest rates. There were some credit card companies that raised interest rates before the new laws took effect, which prompted Congress to implement some Credit Card Act changes early.
However, it seems that most companies have responded well to the Credit CARD Act changes and have made it a goal to educate their consumers about the new changes. Almost every major credit card company clearly labels the new rules on their website and some even show graphics regarding how to read the new statements required by the Credit CARD Act.
The Citi website has a list of new changes and explains how the new rules will affect cardholders. The Citi site clearly states how to read the new credit card statements, standardized information about payment due dates, and information about how and when your payment is applied to your balance.
New credit card statements
Perhaps the most visible change brought about by the Credit CARD Act is the new statements. Credit card companies are now required to inform cardholders how long it will take them to pay off their bill when making minimum payments and what their payment will need to be in order to pay off their loan within 3 years (and how much money they will save in interest if they pay off their card in 3 years). This is an example of the new American Express credit card statement.
Credit card offers improving
As mentioned earlier, one of the big fears was that the Credit Card Act would be the end of good credit card offers and consumers would suffer and there would be no more rewards credit cards or 0% APR credit card offers. That was an understandable fear because the Credit CARD Act changes removed some of the revenue streams credit card companies rely upon for profits, such as limiting fees and interest rate hikes. However, the fears failed to address one major fact: credit card companies still need to attract new customers and to do that, they need to offer a better card than their competitors.