New Credit Card Laws for 2010 – February Update

Brandon Cornett

By Brandon Cornett | 2/17/10
© 2011, All rights reserved

You’ve probably seen a news story about the latest round of credit card changes taking effect. In fact, this is the second of three “waves” of new credit card laws. The first batch were put into place in August 2009, and the second round will take effect on February 22, 2010. The final set of regulations will be implemented in August 2010.

So, what’s on the slate for this month? Here are some of the changes the new credit card laws for 2010 will bring about:

  • Say goodbye to double-cycle billing. This was when the card company charged you interest on your current balance, as well as the average daily balance from the previous billing period. In other words, they charged you twice for the same thing. Surprisingly, there were no laws against this in the past. But there are now. As of February 22, 2010, this practice is illegal.
  • Some people have more than one balance, with a different interest rate on each one. In the past, if you paid anything above the minimum amount due, the card company would apply it to the balance with the lowest rate. In other words, they would keep you paying the higher rate longer. This is no longer allowed, after February 22. The new credit card laws for 2010 require them to put the extra amount toward the higher-interest balance.
  • In the past, the card company could increase your interest rate on existing balances whenever they wanted to. But now, during the first year of a new account, there are only four scenarios where they can increase the rate. You can learn more about those scenarios in the 2010 consumer’s guide to new credit card laws (recommended reading).
  • If your card issuer does raise your interest rate after the first year, the new / higher rate can only be applied to new purchases (after the first year). It cannot be applied retroactively to older purchases.
  • Here’s one of my favorites. The card companies can no longer play games with the payment due date. In the past, they were fond of moving the due date from one month to the next, in order to charge more penalty fees for late payments. According to the new credit card laws for 2010, the due date must occur on the same day each month. Additionally, the cutoff time must 5 PM local time — i.e., no more early-morning cutoffs to screw people over.

This is just a snapshot of the new laws for 2010. If you’re a regular card user, you should familiarize yourself with all of them. The Home Buying Institute has published a helpful guide to all of these laws (going back to 2009). It’s written in plain English, and not legalese. So I recommend take a look. Here’s the link:
http://www.homebuyinginstitute.com/laws.html

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