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Credit Card Act kicks in, consumers benefit

Aug. 30, 2010 - 11:11AM   |   Last Updated: Aug. 30, 2010 - 11:11AM  |  
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Credit card holders take note: New rules took effect Aug. 22 that offer consumers more protections on fees and interest rate increases.

It's the latest step by the Federal Reserve to implement the Credit Card Accountability, Responsibility and Disclosure Act, also known simply as the Credit Card Act. The changes:

Late payment fee limits

If you're late making a minimum payment, your credit card company can't charge you a fee of more than $25 unless one of your last six payments also was late. In that case, your fee may be up to $35. But if your credit card company can show that the costs it incurs as a result of your late payments justify a higher fee, you might get stuck with one.

Your credit card company also can't charge you a late payment fee that is greater than your minimum payment, and it can't charge you an over-the-limit fee of more than the amount you exceeded your limit by.

No inactivity fees

You can't be charged for not using your card.

One-fee limit

You'll be charged only one fee for each event or transaction that violates your cardholder agreement. For example, if your check for your payment bounces, you can't be charged both a late-payment fee and a returned-check fee.

Interest rate increase disclosures and re-evaluations

If your card company increases your annual percentage rate, it must give you an explanation, and it must re-evaluate the rate increase every six months. That gives you a chance to take corrective action, such as improving your credit score. If the company is raising rates across the board, you probably won't be able to affect the situation.

If the company decides to reduce your interest rate after the evaluation, it must do so within 45 days. So if it's past six months and 45 days, your rate hasn't been reduced, and you've taken steps to improve the problem that caused the increase, check with the credit card company about those evaluations. While nothing requires the company to reduce the rate to what it was previously, you can ask whether the company did an evaluation of the rate increase, what the evaluation showed and whether you'll get a reduction.

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Questions? Comments? E-mail staff writer kjowers@militarytimes.com?subject=Question from ArmyTimes.com reader">Karen Jowers at kjowers@militarytimes.com">kjowers@militarytimes.com.

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