Federal Reserve Adds more to Credit Card Protections

TUESDAY, JUL 20, 2010

Why did my credit card company raise my interest rate? What is an "inactivity fee" and why am I being charged for this? Why are these credit card fees higher than my minimum payment? Many credit card owners ask these same questions, but get answers that frustrate and anger them. Beginning on August 22, 2010 additional rules that will benefit consumers are going to take effect and will further require credit card companies to explain and/or limit fees associated with credit cards.

Let's say you are late making your minimum payment on your credit card, starting August 22nd…

Late Payment Fee. Your credit card company cannot charge a late payment fee that is greater than your minimum payment and the fee can not be more than $25 unless:
-One of your last six payments was late, in which case your fee may be up to $35;
-or your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

Over-the-Limit Fee. Your credit card company can not charge a fee that is above the amount you went over your credit limit (ex. If you exceed your credit limit by $10, you can't be charged an over-the-limit fee of more than $10).

Inactivity Fee. Your credit card company can not charge you an inactivity fee (fees for not using your card).

One-Fee Limit. Your credit card company can not charge you more than one fee for a single event or transaction that violates your cardholder agreement (ex. you cannot be charged more than one fee for a single late payment).

Explanation of Rate Increase. If your credit card company increases your card's Annual Percentage Rate (APR), the credit card company must tell you why they increased it.

Re-Evaluation of Recent Rate Increases. If your credit card company increases your APR, the credit card company must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation. It also, requires issuers that have increased rates since January 1, 2009 to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.


If you are struggling with payments to your creditors, foresee it happening in the near future, or just need budgeting help, contact Consumer Credit Counseling Service® of Central New York and talk to a Certified Credit Counselor today!