Credit Card Rules

1. Consumer Affairs Branch
Fairfax County Department of
Cable and Consumer Services
fairfaxcounty.gov/consumer

2.  The Credit Card Accountability Responsibility
and Disclosure (CARD) Act of 2009 provides
consumer protections for credit cardholders.
 Read your agreement, especially the fine
print, to understand your rights, penalties,
transaction fees, and to avoid unnecessary
surprises.

3.  Contract that spells out the terms and
conditions of using a credit card
 Credit card issuers must post credit card
agreements on their websites plus submit to
the Federal Reserve System for posting at:
www.federalreserve.gov/creditcardagreement

4.  Your credit card company must send you a
notice 45 days before they can:
◦ Increase your interest rate
◦ Change certain fees that apply to your account
 Annual fees
 Cash advance fees
 Late fees
 Make other significant changes to the terms
of your card such as increase your minimum
payment

5.  Your credit card company doesn’t have to
send a 45 day advance notice if:
◦ You have a variable interest rate tied to an index. If
the index goes up, notice is not required before
your rate goes up
◦ Your introductory rate expires and reverts to the
“go-to” rate
◦ If you are in a workout agreement, your rate will
increase if you don’t make your payments as agreed

6.  Your credit card company cannot increase
your rate for the first 12 months after you
open an account. There are some exceptions:
◦ If your card has a variable interest rate tied to an
index, you rate can go up whenever the index goes
up
◦ If there is an introductory rate, it must be in place
for at least 6 months. After that, your rate can
revert to the “go-to” rate that was disclosed when
you got the card

7. ◦ If you are more than 60 days late in paying your
bill, your rate can go up
◦ If you are in workout agreement
 If your credit card company raises your
interest rate after the first year, the new rate
will apply only to new charges you make
 If you have a balance, your old interest will
apply to that balance

8.  Cardholders must be given the right to cancel
or opt-out if they don’t accept the changes
 When you opt-out, your account will be
closed and you may have up to 5 years to pay
off the balance
fairfaxcounty.gov/consumer

9. Odessa heard that credit card companies could
no longer make sudden changes to consumer
accounts. When her bank reduced her credit
limit in half, she protested that it was a
violation of the new credit card rules because
the bank did not provide advance notice of the
credit reduction.
◦ Does the bank have to reverse the reduction and
her prior credit limit?

10.  Advance notice is not required if:
◦ The credit card cuts your credit limit
◦ Closes your account
◦ Makes changes to variable and promotional interest
rates
 Notice would be required if the reduction in
the credit limit triggered an over-limit fee or
penalty rate

11.  You have the right to opt out or reject certain
significant changes in terms on your accounts
 Opting out means the cardholders agree to
close their account before fee increases take
effect
 You may have up to 5 years to pay the
balance under the old terms

15.  Cardholders cannot be charged over-limit
fees unless they give permission or opt-in to
the card issuer to approve transactions that
exceed their credit limits
 If you opt-out, a transaction that would take
you over your limit, may be turned down
 If you do not opt-in and your credit card
company allows a charge to go through, it
cannot charge you an over-the-limit fee

16.  If you opt-in, your credit card company can
charge only one over-the-limit fee per billing
cycle
 You can opt-in at any time
 If you don’t have enough credit available on
your card, do you really want to give the card
company permission to charge you a fee to
cover a purchase if you don’t have enough
credit available?

17.  If your credit card company requires you to
pay fees (such as an annual fee or application
fee), those fees cannot total more than 25% of
the initial credit limit
◦ Example, if your initial credit limit is $500, the fees
for the first year cannot be more than $125
 This limit does not apply to penalty fees, such
as penalties for late payments

18.  Your credit card company must mail or
deliver your credit card bill at least 21days
before your payment is due
 Your due date should be the same date each
month
 The payment cut-off time cannot be earlier
than 5 p.m. on the due date
 If your payment due date is on a weekend or
holiday you will have until the following
business day to pay

20.  On Saturday, Marco paid the full balance of
$357 on his credit card at his bank branch. His
payment was two days early, since payment
wasn’t due until Monday. When his new
statement arrived Marco was hit with a $39
late fee and an interest rate increase of 2%.
When he contacted the bank he was told he
was late because Saturday is not an official
business day and since Monday was a holiday,
his payment was not posted until Tuesday
◦ Can the new credit card rules help Marco?

21.  If you make more than the minimum payment
on your credit card bill, your credit card
company must apply the excess amount to
the balance with the highest interest rate

22.  No double billing
 Credit card issuers cannot include the
previous billing period when calculating the
amount of interest charged in the current
billing cycle
 The double billing cycle used the average
daily balance of the current and previous
billing cycles
 This is the most expensive way finance
charges are calculated

23.  According to a recent Sallie Mae study,
college students carried an average balance
of $3,173 on their credit cards in 2009
 82 percent revolved a balance each month

24.  If you are under 21
◦ You will need to show that you are able to make
payments, have an independent means of income
or you will need a cosigner in order to open a credit
card account
◦ If you have a card with a cosigner and want an
increase in the credit limit, your cosigner must
agree in writing to the increase
◦ No prescreened card offers can be made to persons
under21 unless they have consented to receive such
offers

25.  Gift cardholder’s protections
◦ Gift cards can’t expire for at least 5 years from the
date they were activated
◦ Money added to the card at a later date must also
be good for at least 5 years
◦ Issuer cannot assess inactivity fees unless you
haven’t used your card for at least 1 year
◦ Only charged 1 fee per month
fairfaxcounty.gov/consumer

26.  These rules do not apply to:
 Prepaid cards
◦ Long-distance telephone services
◦ Wireless telephone service
◦ VoIP access time
 Reloadable cards that are not intended for
gift giving
◦ Payroll cards
◦ Flexible spending account cards

27.  Loyalty, award, or promotional gift cards that
are given as a reward or as part of a
promotion
 You must be clearly informed of any
explanation dates or fees for these cards

28.  Gift card funds aren’t guaranteed and may
become worthless if the issuer fails
 Buy from a business you know and trust
 Consider the financial condition of the
business and whether it has filed or may file
for bankruptcy

29.  Advertisements for free credit reports must
state that free credit reports are available
under federal law at AnnualCreditReport.com
 This disclosure will help consumers avoid
confusing “free” offers that actually require
consumers to spend money on credit
monitoring or other products or services
 Nationwide consumer reporting agencies
have to delay any advertising for products or
services on AnnualCreditReport.com until
after consumers get their free credit reports

30.  Your credit card company cannot charge you
a fee of more than $25 unless:
◦ One of your last six payments was late. The fee may
be up to $35
◦ Credit card company can show that the costs it
incurs as a result of late payments justify a higher
fee
◦ Credit card company cannot charge a late payment
fee that is greater than your minimum payments
◦ If you exceed your credit limit by $5 you can’t be
charged an over-the-limit fee of more than $5

31.  No inactivity fees
◦ You can’t be charged a fee for not using your card
 One-fee limit
◦ You can’t be charged more than 1 fee for a single
transaction that violated your cardholder agreement
◦ You can’t be charged more than 1 fee for a single
late payment

32.  If your APR is increased, the credit card
company must tell you why
 After your APR is increased, the credit card
company must re-evaluate your rate increase
every 6 months
 If appropriate, it must reduce your rate within
45 days after completing the evaluation

33.  Marco has a $3000 balance on his Fly Forever
Express card. He was notified in writing that
on 45 days, the interest rate on his balance
would increase from 12% to 29%. The card
issuer explained that the increased rate was
necessary due to market conditions
◦ What advice do you have for Marco?

34.  Mel has a balance of $10,502 on his credit
card. After losing his job, he stopped using
the card but was more than 60 days late 1
time on his payment. The credit card
company gave him notice that his interest
rate would increase from 15% to 36%
◦ Can the bank do this?
◦ What are Mel’s options?

35.  Pay on time
 Stay below your credit limit
 Avoid unnecessary fees
 Pay more than the minimum payment
 Read and watch for changes in the terms of
your agreement

36.  Overdraft – when you make a purchase or
ATM transaction but don’t have enough
money in your account to pay for it
◦ Your bank must get your permission to cover
overdrafts
 Opt-in – Give your bank permission to cover
your overdraw and charge a fee
 Opt-out – Bank cannot automatically charge
you a fee. Your transaction may be declined
 Does not cover checks or automatic bill
payments

37.  Sample – Notice

38.  Annual fee
 Cash advance fee
 Balance transfer fee
 Over-the-limit fee
 Late fees
 Lost or stolen card fee
 Return payment fee
 Foreign transaction fee
 Copy fee

39. 12000 Government Center Parkway, Suite 433
Fairfax, Virginia 22035
703-222-8435 TTY 711
www.fairfaxcounty.gov/consumer
consumer@fairfaxcounty.gov