New Law Protects Credit Card Holders

Credit cards have become an even better deal for consumers since President Obama signed the Credit Card Accountability, Responsibility and Disclosure (Credit CARD) Act. Most provisions of the new law take effect in February, but a few have been in force since August 2009 and others don't take effect until August 2010. Here are some highlights of the protections for cardholders under the new law.

Effective Aug. 20, 2009, the Credit CARD Act required card issuers to:

Give cardholders 45 days notice of interest rate, fee and finance charge increases.
Mail statements at least 21 days before a payment is due.

Beginning Feb. 22, 2010, card issuers must:

Extend promotional rates for at least six months.
Apply payments that exceed the minimum to balances with the highest interest rates first.
Keep the payment due date on the same day each month, or the next business day if the date falls on a weekend or holiday.
Inform cardholders of the period of time and total interest it will take to pay off the card balance if only minimum payments are made.
Require a co-signer for credit card applicants under age 21.
Not increase rates, fees and finance charges during the first year that a credit card account is open.
Increase rates and fees only under limited circumstances. This provision eliminates universal default increases (increases that result from the card issuer learning of the cardholder's default on a different credit card or loan).
Keep the terms governing repayment of an outstanding balance unchanged.

Beginning Aug. 22, 2010, card issuers must:

Periodically review the factors that led to an increase in the annual percentage rate (APR), if they impose one, and reduce the APR if indicated by the review.

The law also increases protections for college students against aggressive credit card marketing, and requires colleges to publicly disclose arrangements they've made with card issuers.

Combining the features you want in a credit card has never been easier. The First offers credit cards with low rates, generous rewards, an ample grace period, high credit limits and no balance transfer fees – plus friendly service you can count on. Apply today at www.fnbn.com or stop in to your nearest branch.

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This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Images may be from one or more of these sources: ©Thinkstock, ©Fotolia, ©iStock. ©2010 First National Bank and Trust Company of Newtown.