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Plan Well, Retire Well

Saving and investing your money

What's Up with Your Credit CARD?

In the next few days, a new law goes into effect that will change the way credit card companies handle your credit card account. The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 will go into effect on February 22, 2010. This new law will impact interest rate adjustments, disclosure requirements, and the issuing of credit to young consumers among other things. I was surprised to learn that many people either were unaware of the new law or didn't know very much about it. I have outlined some of the changes below:

1. Interest rates. Under this law, credit card companies cannot raise a customer's interest rate without providing 45 days notice. If a consumer's interest rate is increased due to late payment, after six months of on-time payments and not exceeding the credit limit, the consumer's rate must be reduced again.

2. Fees. Creditors will no longer be able to charge over-the-limit fees without the consumer's permission. Consumers have to opt-in to have these fees assessed. Otherwise, charges that are over-the-limit- will be rejected. Credit card companies will not be able to charge finance charges based on a double-cycle billing which refers to the practice of charging fees on the previous and current month's balance even if the previous month's balance was paid by the due date.

3. Due Dates. Bills must be mailed out no later than 21 days before the due date. Payments received by 5 p.m. on the due date must be counted as on-time.

4. Disclosure. Gone are the days of small, illegible print. Consumers must be provided full disclosure of the terms and conditions of obtaining credit. Additionally, creditors must notify consumers how long it would take to pay off a credit card balance if only the minimum payment is made as well as inform consumers of the total cost in principal and interest payments.

5. Protection. Young consumers, typically college students under the age of 21, will no longer be able to apply for credit unless they have an adult co-signer or can provide proof that they have the ability to repay the debt. Gift cards were thrown in the mix as well. Under this law, gift cards must remain active for at least five years after the purchase date.

These are some of the changes. If you were one of the many not familiar with this law, check out for an easy to follow guide on the Credit Card Act or visit for highlights on the benefits of the new CARD Act. Although laws are put in place to protect us, we all must protect ourselves as well. Don't charge more than you can afford to repay and use credit wisely. For tips on how to use credit wisely, visit our More for Your Money website.

Until we talk again...

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