NEW CREDIT CARD LEGISLATION

New Credit Card Legislation:
What You Need to Know

New laws have radically changed how credit card companies can operate. Here's what you need to know about the new credit card legislation and how it may affect you.

Over-limit fees have been banned. Purchases are now denied if there are insufficient funds. And if cardholders want overdraft coverage, they must choose to opt in for this service. This is a huge loss of revenue for credit card companies and they've mounted an aggressive campaign to convince cardholders to opt in. The fees are typically $30 for each time you use your credit card and don't have sufficient funds available.

One of the consequences of the new legislation is that credit card companies are reducing available credit limits, some by as much as 50%. If you carry an outstanding balance, this is a concern because a higher debt-to-credit ratio could potentially lower your credit score. On each credit account, it's best to keep debt less than 30% of your available credit.

Credit card bill payments are now due on the same day every month. You can now schedule automatic monthly payments to avoid being late on paying your bill.

Credit card companies are busily sending cardholders the details of their new terms. These new terms might include annual fees, higher interest rates and lower reward points. Cardholders have the option of opting out of these new terms, whereupon the account will be closed. However, under the new legislation, cardholders have five years to pay off the debt under the old terms.

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