This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act") goes into effect today. The new rules essentially amount to this: the companies can still hose you, but now they have to tell you they're doing it!
CARD requires that companies provide disclosure about pretty much everything they do, including account activity, date the payment is due and details of transactions that have occurred. Some highlights of the new rules include:
• Credit card companies now have to provide a late payment warning and they have to tell you about any additional fees and higher interest rates that could occur as a result of a late payments.
• Companies will still be able to raise interest rates in some cases, such as when you are more than 60 days late paying your bill or an introductory rate expires after six months.
• Companies will finally tell us the interest rates for different types of transactions, the balances subject to each interest rate and the amount of interest charged for each transaction - that's like to be eye-opening.
• Here's a biggie: companies have to provide you with an estimate of how long it could take to pay off your balance if you make only the minimum payment each month - that could be pretty scary for some! The estimate also has to include how much you'll have to pay to eliminate your balance in three years.
• Your statement will also highlight another potentially scary number: the total amount you've paid in fees and interest charges for the current year.
• My favorite change is that if you're under age 21, it's going to be hard to start the nasty habit of credit cards, unless kids have older co-signers.
In the end, I'm all for increased disclosure - it really is better for consumers. If the Great Recession didn't convince you that outstanding credit card debt was painful, maybe these numbers will. Or maybe it will just make you realize how much you're getting hosed by your credit card company.
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