New Card Act Provisions Provide Additional Protections for Consumers

August 18, 2010, 11:43 am

New protections are expected to be added to the Credit CARD Act soon.

The Federal Reserve is expected to release another round of consumer protections on August 22, 2010.  This set of rules is the latest in a series that implement the provisions of the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act).

Springboard Nonprofit Consumer Credit Management wants to make consumers aware of these changes, as a greater understanding of the terms of their credit card contract increases the likelihood of the consumer being better able to manage his or her finances responsibly.

The new set of regulations includes the following protections:

• The credit card company cannot assess a late fee of more than $25 unless one of the consumer’s last six payments was late, in which case the fee may go up to $35.  However, if the credit card company can demonstrate that the costs it incurred as a result of the late payments justified a higher fee, they are allowed to impose a higher penalty.
• The issuer cannot charge a late payment fee that is more than the minimum payment.  
• When a charge exceeds the account’s credit line, an over-the-limit fee of more than the amount charged cannot be assessed.
• The credit card company cannot charge a consumer an inactivity fee for not using their card.
• Consumers can no longer be charged multiple penalty fees for the same transaction. For instance, both a late fee and an over-limit fee resulting from the same transaction cannot be charged.
• The company must explain any increase in the card’s Annual Percentage Rate (APR).
• If the APR is increased, the credit card company must re-evaluate the increase every six months, and if appropriate, reduce the rate within 45 days after completing the evaluation.  

“As a result of the CARD Act, consumers have an added layer of protection related to their credit cards,” said Melinda Opperman, Springboard’s senior vice president of community outreach and industry relations.  “In addition to being familiar with these provisions, consumers need to review their credit card statements promptly, and read important inserts that accompany the monthly mailings.  These simple steps are a critical part of creating a financially stable life.”

For help understanding how the provisions of the CARD Act impact you, or for assistance getting your finances back on track, reach out to Springboard.  To locate the location closest to you, dial toll free to 800-449.9818, or to find a counselor online go to www.credit.org.

For more information, contact: Sheri Stuart, Senior Communications Specialist

Springboard Nonprofit Consumer Credit Management is a 501(c)(3) nonprofit personal financial education and counseling organization founded in 1974. Springboard is a HUD-approved housing counseling agency and a member of the National Foundation for Credit Counseling, a national organization of nonprofit credit counseling agencies, and a member of the Association of Independent Credit Counseling Agencies. The agency offers personal financial education and assistance with credit counseling, housing counseling, debt and money management through educational programs and confidential counseling. Springboard is accredited by the Council on Accreditation, signifying the highest standards for agency governance, fiscal integrity, counselor certification and service delivery policies. The agency provides pre-bankruptcy counseling and debtor education as mandated by the bankruptcy reform law. The agency offers nationwide phone counseling services and has locations in California, Arizona, Nevada, New Mexico and Texas for in-person counseling sessions. Not all types of counseling are available in-person at all locations, please call for details. For more information on Springboard, call 800-449-9818 or visit their web site at www.credit.org.

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