Alert
Close

Watch the NASCAR race on Sunday at the Atlanta Motor Speedway. Join the Drive to End Hunger!

Highlights

Open

Think You Know AARP Caribbean Cruise Sweepstakes

Money & Work

Contests and
Sweeps

Safe Driving in 2014 Sweepstakes

Learn how AARP Driver Safety can help you stay safe—and enter for a chance to win $1,000. See official rules. 

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

New Laws Help the Credit Card Consumer

man handing his credit card

— Getty Images/Stockbyte Silver

On Feb. 22, a sweeping law takes effect that’s designed to permanently alter the relationship between consumers and their credit cards.

Under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, there will be new limits on interest rates and fees, and credit card statements must include more information about the extent of a consumer’s debt.

The biggest change for most consumers, experts agree, is a ban on hiking interest rates for existing balances in most cases.  After February 22, card issuers will not be able to increase their interest rates for the first year after an account is opened.  Similarly, there are new limits on credit card distribution to young adults and on marketing at college campuses.
Credit card users who carry a balance will find new mandatory information on their monthly statements, telling them how long it could take them to pay off their debt or how much they must pay to eliminate the debt in three years.

The CARD Act will also bring an end to practices such as extremely high fees for exceeding spending limits and charges for making payments over the telephone or online. Credit card issuers will also be required for the first time to apply any payment in excess of the minimum toward the balance with the highest interest rate.

Despite all the changes, credit card issuers still retain significant sway over the issuer-consumer relationship and will no doubt be on the lookout for new ways to make money.

It is likely that issuers will continue to increase fees and create additional charges—for receiving paper statements, for example—while cutting rewards as they look for new ways to keep their bottom line healthy. Also, it will likely be harder to get approved for a credit card, especially if you lack strong credit or proof of income.

What’s New

Interest rates: Credit card issuers will not be allowed to increase interest rates on existing balances unless the customer is more than 60 days late with a payment. Exceptions to this rule are if the card has a variable interest rate or if the rate is part of an expiring promotional deal.

First-year protection: For card accounts opened after Feb. 22, issuers cannot raise interest rates at all for the first year.

Over-the-limit charges: If you reach your credit limit, you will no longer be able to continue making charges, and you’ll be charged no over-the-limit fee. That is, unless you tell your card issuer that you would like to allow over-the-limit charges (and fees).

Putting debt in black and white: Statements will be required to note the amount of time it would take to pay off the current balance if the customer makes the minimum payment each month. They will spell out the monthly amount needed to pay off the current balance in three years.

Minimum payments: Any amount paid over the required minimum payment will be allocated toward the balance with the highest interest rate.

Fees: No more fees for paying by phone or online.

Tighter standards: Credit card issuers will be required to consider a person’s ability to pay by looking more closely at income, assets and current obligations before issuing credit or establishing a credit limit.

Predictability: Payments must be due on the same day every month.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Life insurance: you are covered rain or shine

Exclusive annuities for members from AARP Lifetime Income Program from New York Life.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Homeowners Insurance
Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.