Interest rate hikes on existing credit card balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Over-the-limit fees would be prohibited if consumers exceed their credit limits due to holds placed on their credit cards.
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Spotlight on New Credit Card Rules

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Here's how the new credit card rules have been written to protect all credit card consumers, civilian or military:

Limits on interest rate hikes: Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year after issuers give 45 days' advance notice of the change.

Getting rid of Universal Default: Raising interest rates on customers based on their payment records with other nonrelated credit issuers (such as utility companies and other creditors), will end.

More time to pay: You will have "a reasonable amount of time" to make payments on monthly bills - at least 21 days after credit card statements are mailed or delivered. This can be especially helpful if you are on military deployment, in the middle of a PCS move, or otherwise dealing with the complexities of military life.

Clearer due dates and times: Your on-time payment will no longer be set to early morning cut-off times; and payment with due dates on a weekend or holiday must be accepted if mailed on those days as well. Especially when you are on military deployment, making on time payments can become a challenge; extending the cut-off times to allow you the most possible time to pay on-time is to your benefit.

Highest interest balances are paid first: Some credit card accounts carry different interest rates for different types of purchases. In this case, payments in excess of the minimum amount due must go to balances with higher interest rates first or divided on a proportional basis. Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first, extending the pay off on highest-interest rate balances. Protecting your military credit rating is important, and paying off credit cards helps you gain the higher ratings.

Limits on over-the-limit fees: Over-the-limit fees would be prohibited if consumers exceed their credit limits due to holds placed on their credit cards. Oftentimes, a hold reduces the amount of available credit on the account and consumers are charged with over-the-limit fees when they try to make additional charges. No longer.

Double trouble: no double-cycle billing: Finance charges on outstanding credit card balances would be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges, a practice known as double-cycle billing.

Clear credit terms: Credit card applications, monthly statements and other materials must clearly display terms in reader-friendly boxes with large type. Credit card issuers must also disclose the consequences of only making minimum payments each month - that is will take much longer to pay off the credit card balance. Issuers also must clearly explain "how to avoid interest." The term "fixed rate" card can only be used if the rate will not change for a specified period, as long as the payments are current. Monthly statements would also carry boxes that provide year-to-date totals on the amounts paid in fees, interest and other charges.

Subprime credit cards with fee harvesting disallowed: Subprime credit card holders may be charged account-opening fees that eat up their available balances. This "fee harvesting" would be banned if issuers charge upfront security deposits and fees that are more than 50 percent of the credit limit. Also, fees that exceed 25 percent of the available credit limit must be spread over the first six months of card use, rather than at the beginning.Telephone pitches for credit cards must include information about how much available credit would be left on a credit card if upfront account opening fees are charged and those fees are more than 25 percent of the credit limit.

Full disclosure on interest rates: When advertising or marketing credit cards to consumers, issuers would have to disclose factors that will determine your interest rate or credit limit, to eliminate a bait and switch: being teased with low interest rates but getting charged much higher interest rates once you apply for the credit card.

Foreign transaction fees: Any fees charged for purchasing goods or services in a foreign currency or for using the credit card outside of the United States would have to be disclosed in a table on credit card applications and solicitations. Again, for military servicemembers on overseas deployment, this helps avoid extra fees for purchases overseas.



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