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Credit Card Companies Respond to Credit CARD Act

by Ryan Guina

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

Credit Card ActThe 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.


Published or updated January 1, 2013.
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{ 5 comments… read them below or add one }

1 Kristen

I’ve been asked frequently about the possible negative implications of the CARD Act, such as lower credit limits and higher fees. It’s still a little early to know exactly what impact the new regulations will have, though there does seem to be anectodal evidence that the credit card issuers are imposing more fees.

However, in regards to reduced credit limits and making it more difficult to get credit, that has been going on for awhile, long before these new regulations came into play. I think that has less to do with the new laws and more to do with the overall financial crisis. More and more people have been defaulting on their credit card payments. And a lot of consumers were given large credit limits which they probably should never have had to begin with. (I will cop to being one of those people several years ago, so I know from first-hand experience.)

I think the credit pendulum has been swinging back and forth to extremes for awhile. Hopefully it will eventually reach a center point where those who are credit-worthy and those who are not are each given the appropriate amount of credit, fees and interest rates accordingly.

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2 Ryan

I think we are seeing some pendulations within the Credit Card industry, which is understandable given the recent credit crisis. The good Credit Card offers seem to be coming back though, which means there is health and competition for new customers. Hopefully consumers a lenders have learned from the last few years and will both sides will show some restraint.

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3 Benjamin

Hi Ryan! Great article and thank you for your submission to the Personal Finance Carnival! The Carnival is scheduled to go live (with your article included!) April 22! Thanks!

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4 Ryan

Thanks, Benjamin. I look forward to reading it! :)

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5 TPKANE

AARP,I JUST KNOW THAT WHILE WE WERE FOCUSED ON WHAT FEW CRUMBS WE GOT IN THE CREDIT CARD LAW,THE BANKS AND CREDIT CO.S WERE BUSY TOO.THEY WENT UP ON THEIR RATES BEFORE THE LAW PAST.THEY CAME UP WITH SEVERAL CATCH PHRASES TOO SQUEEZE YOUR BILLING STATEMENT.I LIKE THE ONE CASH ADVANCES WHERE YOU DON`T ACTUALLY WITHDRAWL CASH BUT GET CHARGED FOR YOUR PURCHASES?ALSO THE NEW GUARNTY THAT I WASNT TOLD WHEN I SIGN UP FOR THE STUPID PROTECTION GOES UP WITH YOUR INTERST ACCORDING TOO YOUR BALANCE.IT HAS NOTHING TOO DUE WITH IT.IT IS NOT LIKE THERE ARE NOT ENOUGH HIDDEN LINES NOW TOO STEAL YOUR MONEY.THAT WAS THE WHOLE PURPOSE IN THE CREDIT LAW ANYHOW.TOO PUT SOME KIND OF CHECK AND BALANCE ON THE CREDIT COMPANIES AS THEY DO JUST ABOUT WHAT THEY WANT ANYHOW.NOW I AM GETTING INFO FROM EACH CREDIT CO.ON NEW TERMS GO INTO EFFECT AUGUST.WATCH OUT.BABY BOOMERS.READ THOSE STATEMENTS QUESTION AND CALL THEM ,BUG THEM,WRITE LETERS.THEY JUST FIGURE YOU WILL FIGURE IT IS EASIER TOO PAY IT AND YOU WILL I HAVE DONE IT TOO.SHAME ON US.

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