We're wrapping up our week long series on the Credit CARD Act. For those of you just joining us, we've been gearing up for the final changes that are scheduled to go into effect on Aug. 22.
So far we've covered all of the major provisions that have gone into effect to date, including what you need to know about interest rates and account changes, fee restrictions, student protections, and enhanced consumer disclosures.
The final section of the Act relates to how your payments are allocated, statement mailing requirements, and billing cycle changes. Here's what you need to know:
- Credit card issuers are required to mail your statement at least 21 days before your payment is due and your monthly due date must be the same date each month.
- Double-cycle billing, or the practice of calculating interest charges on both the current balance and the previous month's balance, is prohibited.
- Any payment over the minimum balance due must automatically be applied to the highest interest balance first.
What you need to know: Before a credit card issuer can open a new account, they must first take into account your ability to repay. A card issuer cannot open a new credit card account, or increase an existing credit limit, unless they first consider your ability to make the required payments under the terms on the account.
There's no question that the CARD Act is a great step forward for consumer protection, but we have one final phase left to go. The remaining provisions will go into effect on August 22, 2010, and include the final rules that limit fees on gift cards and also gives consumers the right to earn back their previous interest rate if they are able to make continuous on time payments for 6 months. Join us on Monday, where we'll review the final provisions and wrap up the final chapter in this series.