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The Credit Card Crunch

On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, and bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, nine are likely to be credit cards and four are likely to be installment loans. (Source:

Your Credit Card Rights.

The Credit Card Accountability Responsibility and Disclosure Actof 2009 (commonly known as the Credit Cardholders' Bill of Rights) is a federal law that is designed to protect cardholders from unfair practices by card providers. Below is a list of some of the important rights this law grants you. Thanks to NEAS our Newsletter from Your EAP and WorkLife Service, Winter 2010.

Interest Rates

Your regular interest rate cannot be increased during the first 12 months of opening a credit card unless you are more than 30 days late with a payment. Promotional interest rates must last at least six months.

An interest rate increase can only apply to new charges, not the pre-existing balance. This rule does not apply if you are past due more than 60 days.

If your interest rate was raised due to making a payment late, the card issuer must reinstate the lower interest rate if you make on time payments for six months.

You must be given at least 45 days notice of an interest rate increase.

Universal default clauses are prohibited, meaning a creditor can no longer raise your interest rate because you were delinquent with another creditor.


You cannot be charged an over-the-limit fee unless you authorize your credit card company to process over-thelimit transactions. If you do provide authorization, you can only be charged one overthe- limit fee per billing cycle.

You cannot be charged a fee for paying your bill online or over the phone, except for expedited (last minute) phone payments.

The amount of any fee charged must be reasonably related to the actual cost the creditor incurred as a result of your action.

Economy and You, read Zero Debt.

Billing Practices

If you have balances with different interest rates and pay more than the minimum required amount, the extra payment must be applied to the balance with the highest interest rate.

Your balance cannot be calculated using the doublecycle billing method (which uses your daily balance over the past two billing periods).

Your statement must be mailed to you at least 21 days before the due date.

If your due date falls on a weekend or holiday, your payment is considered on time if it is made on the next business day.

If a mailed payment is received by 5 PM on the due date, it cannot be marked late - a creditor cannot set a deadline of 11 AM or another earlier time.

Restrictions for Young Adults and Teens

Consumers under the age of 21 must have a co-signer over the age of 21 or independent means of repaying the balance (such as a job) to obtain a credit card.

For joint accounts held by a person under 21 and an adult, the card issuer must get approval from the adult to increase the credit limit.

Consumers under the age of 18 cannot have a credit card unless they are emancipated. However, they can still be an authorized user.

Most of the provisions of the law go into effect in February 2010.