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already don’t have account-opening fees and allow more than 21 days to make payments.
The new rules include, among others, the following restrictions:
• Any payment amount above the minimum required payment must be applied to the part of the balance that has the highest interest rate.
• Increases in interest rates can only be applied to new credit cards and on future purchases or advances, not on current balances.
• Borrowers must be given a reasonable period of time to pay.
A payment could not be considered late unless the consumer is given a reasonable period of time to pay.
• Unreasonably high fees cannot be charged for exceeding the credit limit because a hold has been placed on the account.
• Unfair practices for computing balances cannot be used, e.g., double-cycle billing. Double-cycle billing is the practice of computing interest twice a month instead of once.
• Unfair fees and security deposits cannot be charged for issuing credit cards. In the past many “subprime” or “secured” cards
for consumers with low credit scores typically had no more than a $500 credit limit but required a large upfront fee, often the full amount of the credit limit. For example, a credit card with a $500 credit limit might have required a $500 “security deposit.” The new rules limit that fee to 50% of the credit limit and allow the cardholder to pay off the initial balance over a year, not immediately.
• Offers for credit cards must be direct and understandable and not deceptive.
• Consumers must be given 45 days notice before any changes are made to the terms of their account, including increasing the penalty fee for missed or late payments.
Too Much Credit
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