Below is a brief summary of credit card practices that are changing as a result of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. These changes must take place by February 2010.
* Universal default (that is, raising a person's interest rate as a result of late payments to another creditor) is banned.
* So-called "teaser" rates (that is, low initial rates for a short period of time) must be in effect for at least six months.
* Interest rates on an existing balance cannot be raised unless payments are more than 60 days late or a teaser rate expires. If a consumer pays at least the minimum balance on time for six consecutive months, the previous, lower, rate must be restored.
* Credit card applicants under age 21 must show proof of income or have a cosigner in order to be approved for a credit card.
* Credit cardholders must have 21 calendar days from the time their statement is mailed (up from 14 days) to pay their bill.
* Late fee "traps" such as weekend due dates, shifting payment dates, and early morning deadlines are prohibited.
* Consumers must receive 45 days' notice (up from 15 days) before a change in account terms such as increased interest rates and fees.
* Payments that are greater than the required minimum payment must be applied, in descending order, starting with the balance with the highest interest rate.
* Over-the-limit fees will be charged only if consumers give their permission for creditors to process transactions that would place the account balance over the approved maximum limit. In other words, consumers must "opt in" for an over-the-limit fee to be charged.
* Two-cycle average daily balance calculations are prohibited. This means that lenders cannot use the balance from the previous month to calculate interest in the current month.
* Credit card issuers must display on billing statements how long it would take to pay off the existing balance and the total interest cost if only required minimum payments are made.
* With the exception of clearly disclosed "teaser" rates, initial credit card contract terms must remain stable for an entire year before any changes are made.
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