Starting in 2010, there were a number of changes made to the rules in how credit card companies could interact with their customers. There are a number of key changes that have been introduced to the market because of these new legal requirements, so knowing what a credit card company can and cannot do will help to keep you protected.
What a credit card company must do for you: If you are going to experience an increase to your rate or there will be changes to the fee structure of your line of credit, then a lender must give you a minimum of 45 days notice before they are able to take the actions they wish to take. There are 3 specific changes to the terms and conditions that must have this 45 day notice sent to consumers.
- Interest rate increases.
- The changing of annual fees, cash advancement fees, and late payment fees that are specifically associated to an account.
- Any other “significant” changes to the terms and conditions of a credit card.
This is important to know because this 45 day period of time is designed to give consumers the chance to accept or reject the changes to the terms that have been proposed. Consumers have the option of rejecting changes and canceling the card, but lenders have the ability to close an account and raise the monthly amount due if this happens.
What a credit card company can make you do: If you decide to cancel a card and there is an outstanding balance on it, then the credit card company can mandate that you pay off your complete debt balance in 5 years. If they choose not to do this, they also have the option to double the percentage of the remaining balance that can be used to determine what your minimum monthly payment happens to be.
What a credit card company doesn’t have to do for you: There are certain changes to the terms and conditions of a credit card that don’t require a 45 day notice. These changes can occur immediately without any notice whatsoever to the consumer.
- Interest rates that change based on the variable conditions of the indexed market rate.
- The expiration of introductory rates that transition into the standard rates of a regular line of credit from the lender.
- Rate increases that are associated with breaking the terms and conditions of being a credit card member, which is usually not making a payment on time.
What new information you must receive: Your credit card statement is required to let you know how long it will take to pay off the debt if you just pay the minimum amount due without making any new purchases. There is also a minimum payment amount that will inform customers of how much money they’ll need to pay monthly in order to pay off their account in 3 years, if applicable, instead of the prolonged amount of time.
By knowing what a credit card lender can and can’t do, you’ll be able to know if your terms and conditions are indeed allowed. Use this information as a reference for your situation so that you can choose to proceed as you best see fit.