View Mobile Site

Ask the Expert

Signal Photos


Janice France-Pettit: New credit-card rules you should know

Union Bank of California

Posted: June 12, 2010 4:55 a.m.
Updated: June 11, 2010 5:17 p.m.

In February 2010, new credit card rules established by the Credit Card Accountability Responsibility and Disclosure Act of 2009 were put into effect. Many consumers may have already experienced these changes, and it is important to have a sound understanding of what the new rules might mean for you and your finances.

Following is a brief review of the new credit card rules.

Credit card companies must give you 45 days notice for any fees, increased interest rates or changes to the terms and conditions of your card. The notice should provide an adequate amount of time for you to close your card or to determine if you need more information.

However, if you chose to close your card, you may be required to pay off the balance at an increased rate or a shorter amount of time, so be sure to research these penalties before making a decision. There are certain scenarios where the credit card company does not have to send you these notices, such as if your rate has increased because you have not made the payments as agreed.

To verify if you will receive notices, you may visit the Federal Reserve's website at

Your credit card bill will now show you how long it will take you to pay off your existing balance if you continue to make the minimum payments. It will also reveal how much you need to pay each month in order to pay off your balance within three years.

Billing and payment
Credit card issuers are required to provide consumers "reasonable time" to pay their bills. Payments will be due at least 21 calendar days from the time the bill is mailed.

Your payment will always be due on the same date each billing cycle and your payment cutoff time cannot be before 5 p.m. on the date it is due. Another requirement for credit card companies is that they have to allow you one business day to complete a payment if it is due on a weekend or holiday.

The new legislation also prohibits double cycle billing - when interest charges are calculated based on balances from previous cycles, as opposed to the current billing cycle.

The law requires credit card companies to pay off the highest interest rate balances first. If you pay above the minimum on your monthly payment, then those extra funds will be used to pay off your highest interest rates first. There are exceptions to this rule, so consult with your financial advisor or the Federal Reserve Web site for more information.

Rate and fee rules
In general, your credit card company cannot increase your interest rates within the first year you open the account. If the company does increase your rate after a year then the new rate will only apply to new charges and your old interest rate will apply to your existing balance.

You are now required to inform your credit card company if you want to allow transactions that exceed your credit limit. If you do not, transactions that exceed your limit may be denied. Credit card issuers will not be permitted to charge over-limit fees unless a cardholder permits the issuer to process over-limit transactions.

Also, credit card companies cannot impose fees, such as annual fees, that total more than 25 percent of the initial credit limit.

The law also requires credit card issuers to prove that young adults under the age of 21 have an independent means of repaying credit card debt or have a parent, guardian, or other qualified individual 21 years or older co-sign the credit card application.

There are exceptions to each rule mentioned above, so you should monitor online resources, such as, and regularly communicate with your financial advisor to stay informed.

The foregoing article is intended to provide general information about retirement planning for businesses and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor. Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions. Her column reflects her own opinion and not necessarily that of The Signal.



Most Popular Articles

There are no articles at this time.
Commenting not available.
Commenting is not available.


Powered By
Morris Technology
Please wait ...